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Richmond Fed President Tom Barkin expressed concerns about the potential for tariff-induced price increases as early as June. In an interview with Axios, Barkin highlighted the pervasive uncertainty among businesses, which could dampen economic activity. He emphasized the need for the Federal Reserve to respond with caution to the emerging surge in prices.
Barkin's comments come in the wake of new tariffs and their impact on the economy. He noted that while the direction of the economic effects is apparent, the exact outcomes remain uncertain for businesses. "The direction is clear ... it's just the destination that people are challenged with," Barkin stated ahead of his speech to the Economic Club of Washington, D.C.
Delving into the details, Barkin, who has a background as a strategy consultant and regularly converses with business leaders, discussed the dilemma companies face regarding the absorption of tariff costs. He mentioned that most companies have enough inventory to delay the impact of the tariffs, projecting price increases to be more significant in June rather than April.
Barkin also shared insights from a conversation with a home improvement manufacturer, who decided against running their usual Memorial Day promotion due to limited inventory at pre-tariff costs. This decision underscores the immediate effects of tariffs on business strategies and consumer prices. Barkin's observations suggest that businesses are preparing for a landscape where higher costs due to tariffs become more pronounced in the coming months.
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