Bloomberg Talks Former Fed Vice Chair Richard Clarida Talks Balancing Risk
Aug 22, 2025
Richard Clarida, a global economic advisor at Pimco and former Vice Chair of the Federal Reserve, offers sharp insights on U.S. monetary policy. He discusses the balance of risks between labor market dynamics and inflation. Clarida emphasizes the importance of the Fed's independence in the face of political pressures and outlines the expectations for achieving price stability. He also contrasts inflation strategies between the U.S. and Germany, highlighting investment opportunities in undervalued European markets. Finally, he explores the evolving economic landscape influenced by recent global events.
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Powell Signaled September Cut
- Richard Clarida interprets Powell as opening the door to a September rate cut by emphasizing balance of risks.
- The Fed views labor-market downside risk as bigger than persistent inflation risk right now.
Dual Mandate Trade-Offs
- Clarida stresses the Fed's dual mandate forces trade-offs between inflation and unemployment.
- He says the Fed is currently tilting toward avoiding labor-market weakness over guarding against higher inflation.
Independence Through Mandate Focus
- Clarida frames Powell's Jackson Hole emphasis as a defense of the Fed's congressional mandate.
- He views focusing on the dual mandate as the Fed's answer to questions about independence.