Central Banks
Fed’s Musalem Wary of Threat of Persistent Tariff Inflation
Fed officials are dealing with an unusual level of uncertainty over the direction of government policy under the Trump administration.
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Federal Reserve Bank of St. Louis President Alberto Musalem said it’s not clear any inflationary impact from tariffs will prove temporary, and he cautioned that secondary effects could prompt officials to hold interest rates steady for longer.
Musalem said there is a greater risk inflation could stall above the Fed’s 2% goal or move higher because of changes to tariffs and other factors, reiterating it’s vital for inflation expectations to remain stable.