US stock futures edge lower after S&P 500 hits record high; PCE data in focus
Investing.com -- Federal Reserve Bank of Richmond President Thomas Barkin said Thursday tariffs are very likely to increase inflation in the coming months, while noting that central bank policy is appropriately positioned for what lies ahead.
"I do believe we will see pressure on prices," Barkin stated in prepared remarks for a New York Association for Business Economics gathering.
Regarding tariffs and their impact on inflation, Barkin said, "to date, these increases have had only modest effects on measured inflation, but I anticipate more pressure is coming." He noted that businesses have indicated they plan to pass along at least some of the higher import taxes imposed by President Donald Trump.
Barkin clarified that he doesn’t expect the inflation impact to be as significant as what occurred during the pandemic. He also pointed out that consumers may shift away from tariffed goods, which could limit some inflationary effects.
Last week, the Federal Open Market Committee kept its overnight target rate unchanged at between 4.25% and 4.5%. The central bank is remaining cautious amid expectations that tariffs will increase inflation this year while potentially slowing growth and hiring.
Barkin acknowledged that the Fed faces risks to both its employment and inflation mandates. Due to uncertainty in the economic outlook, he declined to specify the future direction of monetary policy.
"Given the strength in today’s economy, we have time to track developments patiently and allow the visibility to improve," Barkin said, adding, "when it does, we are well positioned to address whatever the economy will require."
He described the current economic situation as positive, calling recent inflation data "encouraging" and job growth "healthy."
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