Fed Maintains Inflation Focus Amid Rising Tariff Concerns

Recent reports indicate a mixed outlook on U.S. inflation, with the March CPI showing a decline to 2.8%, its lowest since last year, yet core services inflation remains stubbornly high. Minneapolis Fed President Neel Kashkari highlighted concerns about the impact of tariffs on trade, particularly for farmers, and cautioned against rapid interest rate cuts as inflation persists. He emphasized that the central bank's primary focus is to keep inflation under control amid shifting U.S. trade policies, which may influence long-term interest rates. Despite recent market volatility, Kashkari expressed confidence in the orderly functioning of financial markets but underscored the need for the Fed to intervene only in true emergencies. The consensus among economists suggests that while inflation is easing, it is not sufficient to prompt the Fed to alter its current rate strategy significantly. Overall, uncertainties stemming from tariff policies could lead to renewed inflationary pressures, necessitating a cautious approach from the Fed.