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Investing.com -- Federal Reserve Bank of Richmond President Thomas Barkin stated Thursday that tariffs are likely to increase inflation in the coming months, while indicating that current monetary policy is appropriately positioned.
"I do believe we will see pressure on prices," Barkin said in prepared remarks for the New York Association for Business Economics.
Barkin noted that while tariff increases have had minimal effects on inflation so far, more pressure is expected as businesses plan to pass on at least some of the higher import taxes imposed by President Donald Trump to consumers.
Despite these concerns, Barkin does not anticipate the inflationary impact to reach the levels experienced during the pandemic. He suggested consumers might shift away from tariffed goods, potentially limiting some price increases.
The Federal Open Market Committee kept its overnight target rate unchanged at between 4.25% and 4.5% at its meeting last week. The central bank remains cautious as tariffs are expected to increase inflation while potentially slowing economic growth and hiring.
Barkin acknowledged risks to both the Fed’s employment and inflation mandates but did not specify future policy direction. He emphasized that the current economic strength allows for patient monitoring of developments.
"When it does [improve visibility], we are well positioned to address whatever the economy will require," Barkin stated.
The Richmond Fed president described the current economic situation as positive, with "encouraging" recent inflation data and "healthy" job growth.