Austan Goolsbee spoke at Jackson Hole on August 23, 2024.
David A. Grogan | CNBC
Federal Reserve officials have gone to great lengths to comment on fiscal policy, but the imminent threat of tariffs has forced their hands.
Several central bank policymakers have not only noticed the uncertainty of Donald Trump’s desire to slap in the face in recent days Broad responsibilities Regarding products from Canada, Mexico and China, and the EU, they also highlighted the potential impact on inflation.
Any indication that the continued price pressure on tariffs could make the Fed longer interest rates longer.
In a speech at an automotive workshop in Detroit on Wednesday, Chicago Fed President Austan Goolsbee cited a number of supply chain threats, including “large tariffs and an increasing trade war” potential”.
“If we see inflation rising or stagnant in 2025, the Fed will be in a tough position to try to figure out if inflation comes from overheating or whether it comes from tariffs,” Goolsbee said. “This difference is for deciding when or It is crucial to take action.”
Last week, the Federal Open Market Committee (Goolsbee) was a member of the vote. Vot to keep its benchmark interest rate stable As the evolving economic situation is assessed, it is in the range of 4.25% to 4.50%.
Against the backdrop of game tricks between Trump and the largest trading partner in the United States, he delayed taxes on Canada and Mexico, but increased tariffs on China by 10% while tariffs on China increased by 10% Retaliate with your own measures.
Economists generally believe that tariffs have a one-time impact on prices, affecting specific commodities targeting responsibilities, but are not a broader, more basic inflation driver. But in this case, Trump is launching a network large enough to create the basic inflation the Fed fears.
Limited roadmap
In an interview with CNBC earlier this week, Boston Fed President Susan Collins, also a FOMC voter, is looking at the potential impact of tariffs, noting Trump’s proposed approval of tariffs unusual nature.
“We have limited experience with such a huge and very broad tariff,” she said. “There are many different dimensions, and there are second round effects, which makes it particularly difficult to really evaluate how many quantities…we don’t know the time range that will lead to rising prices. level.”
If the tariffs are short-lived, you expect the Fed to try to pass. But, from this perspective, there are a lot of factors. So, I would quickly say that the underlying trend of inflation The economy’s view of how I view future policies is really important.”
Other Fed officials, including Philadelphia President Patrick Harker and Atlanta’s Federal Reserve Raphael Bostic, also expressed concern about potential inflationary effects and said they will also focus on long-term effects.
On his chair Jerome Powell At his conference press conference last week, multiple issues on tariffs were skewed, saying it was too early to make a judgment on fiscal policy.
“We don’t know what happens with tariffs, through immigration, fiscal policy, regulatory policy,” he said. “I think we need to let these policies be articulated before we can start a reasonable assessment of their impact on the economy.”
– Contributed to this report.
