Central Banks
Trump’s Trade War Reignites Fed’s ‘Transitory’ Inflation Question
- Officials say lingering uncertainty supports cautious approach
- Policymakers may confront both high prices and growth concerns
President Donald Trump’s rapidly evolving trade war threatens to resurrect an all-too-familiar question for the Federal Reserve: If inflation moves higher, will it be transitory?
Trump’s decision to slap tariffs on America’s largest trading partners — and his vows for more levies — could dampen economic growth and add to already stubborn inflation. But policymakers have made clear the central bank’s reaction will depend on whether they believe the tariffs are stoking a one-time price increase or causing longer-lasting ripple effects.