Fed's Collins and Cook caution about the risks of policy uncertainty

Federal Reserve (Fed) Bank of Boston President Susan Collins and Fed Board of Governors member Lisa Cook participated in a virtual discussion on Wednesday, with both key policymakers cautioning that overarching uncertainty remains a key sticking point for Fed policy transmission, as well as the central bank's ability to manage policy rates effectively.

Key Collins highlights

Key to understand how uncertainty impacts economy.
Uncertainty notable in areas where long-term investment is happening.
We must look at data holistically to measure uncertainty levels.
Uncertainty can even speed up some types of economic activity.
Uncertainty leading to wait and see approach to price setting.
Higher productivity growth has improved economy's supply side.

Fed Cook highlights

We must be cautious and humble when looking at data.
Latest jobs report is concerning.
Big revisions can happen at economic turning points.
Unemployment rate still a good indicator of slack.
AI technology could affect both job and inflation sides of Fed mandate.
AI could bring gains to price stability.