Fed's Kashkari Warns Tariffs Risk Long-Term Inflation Stability

Federal Reserve officials, including Minneapolis Fed President Neel Kashkari, have emphasized that while tariffs may cause a one-time increase in prices, there is a risk that persistent high inflation could unanchor public expectations and make inflation more entrenched. Kashkari stated it is the Fed’s responsibility to ensure that tariffs do not lead to longer-term inflation, noting that so far, long-run inflation expectations have remained stable despite recent trade tensions and tariff escalations between the US and China. He also warned that tariffs act as a drag on economic growth and that policymakers must remain vigilant to prevent inflation expectations from rising. The central bank is closely monitoring the situation and has not reached a conclusion about the future path of interest rates, stressing the importance of data-driven decisions amid economic uncertainty.