Waller Discusses Inflation Amid Trump's Tariff Shock

Federal Reserve Governor Christopher Waller predicts that the inflationary effects of President Trump's tariffs will be transitory, though he acknowledges that similar predictions in the past did not hold true. Waller outlined two scenarios: one with higher tariffs leading to significant inflation but eventually easing, and another with smaller tariffs resulting in a more moderate inflation impact. He emphasized that while inflation might initially rise, it would eventually stabilize, and the Federal Reserve might cut interest rates if the economic slowdown threatens a recession. Trump's tariff policy has been described as one of the most significant economic shocks in recent decades, with potential to slow growth and increase unemployment. The Fed's approach remains flexible, with rate cuts possible if economic conditions worsen significantly.