Of Bostic, Goolsbee, tariffs, and the Panama Canal.

The biggest takeaway from today’s sit downs with Raphael Bostic, president of the Federal Reserve Bank of Atlanta and Austan Goolsbee, president of the Federal Reserve Bank of Chicago, was the continued need for the independence of the Federal Reserve System from political influence and that the maximum employment mandate was not at risk given the level of the unemployment rate.

The issue of tariffs came up during the talks with both Bostic and Goolsbee. My takeaway from both central bankers was that when tariff impacts start to percolate into consumer prices, we may see that one time rise in the lock levels, and consumers adjusting accordingly to the new prices.

Their discussions on this aspect of the tariffs set a picture of the Panama Canal in my mind. The two big differences between a Panama canal analogy and the impact of the tariffs is that the change in price levels only lasts so many miles and then you have two big bodies of water to contend with on either end. Tariffs, ironically, engender greater uncertainty. At least you know that you will run into the Caribbean Sea or the Pacific Ocean depending on the direction of your journey.

I did observe between 2:00 pm and 3:00 pm a fall in the EUR/USD from around 1.1720 to 1.1700. Earlier in the day I bought a contract predicting EUR/USD closing above 1.1680 by 3 pm. That contract settled at 1.17006. I would still like to get some understanding as to the energy driving dollar strengthening during that period.

Reuters reporting at the time of this writing a EUR/USD rate at 1.1698.

Alton Drew

13 August 2025

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