Chicago Fed President warns that a dock worker strike may disrupt the supply chain, emphasizing the need for gradual interest rate cuts to restore normalcy

According to the Zhitong Finance and Economics APP, Chicago Fed President Guerspé stated that if the dock workers' strike (expected to start on Tuesday) lasts for a long time, he would be concerned as it could impact the supply chain.

Guerspé stated in an interview with Fox Business Channel on Monday: "Any negative supply shock, in our terms, will increase operating costs and lead to shortages, which is a problem we have to face, and its impact has always been negative."

Dock workers at ports on the U.S. East Coast and Gulf of Mexico are less than 24 hours away from striking. The possibility of a strike is increasing due to a deadlock in negotiations with groups representing shipping companies and port operators. This could disrupt the flow of goods, affect prices, and have broader economic implications, similar to supply chain disruptions during the COVID-19 pandemic.

Guerspé also mentioned that policymakers began lowering interest rates earlier this month, which he deemed an appropriate measure as there have been some "warning signals" in the labor market. Nevertheless, he stated that employment and inflation levels are basically meeting the Fed's targets, and the overall economy is still growing well.

Economists and investors are now focusing on the Fed's next meeting on November 6th and 7th, as well as the economic data released before the meeting, to predict whether officials will choose to cut rates by 50 basis points again or return to the more common 25 basis points cut.

Guerspé declined to reveal whether he supports a small or large rate cut at the next meeting, emphasizing instead the importance of considering the rationality of the entire rate-cutting process and returning rates to a "normal" level, which may take a year or longer