Tariff Inflation Will Likely Be Transitory, But Fed Won’t Say So
- Fed study in 2018 found tariff inflation likely wouldn’t last
- But pandemic fail makes it harder to ‘look through’ price rise
Operations at the Port of Los Angeles.
Photographer: Eric Thayer/BloombergThis article is for subscribers only.
Donald Trump’s tariff barrage may trigger a response from the Federal Reserve that the new president won’t like.
Trump is promising across-the-board charges on imports when he’s back in the White House. In his first term, Fed staffers gamed out a similar scenario and concluded that inflation would accelerate – but not for long. And since the tariffs were ultimately seen as a drag on the economy, they prescribed lower interest rates as the best remedy.