TechFlow news, April 9 — According to Jinshi Data, Federal Reserve's Kashkari stated that considering the impact of tariffs on inflation, the Fed is unlikely to cut interest rates in the face of tariffs even if the economy begins to deteriorate. Kashkari said Trump's tariffs are "much higher and broader in scope than expected," and he anticipates these tariffs will reduce investment and economic growth, pushing up inflation "at least in the short term."
Kashkari wrote, "Tariffs have raised the bar for changing interest rates in any way. Given the critical importance of keeping long-term inflation expectations stable, and the potential for tariffs to boost near-term inflation, the threshold for rate cuts is higher even amid economic weakness and potentially rising unemployment."
He noted that recent indicators of inflation expectations have already begun to rise, and the U.S.'s prolonged experience with high inflation in recent years are reasons why the Fed may not be able to ignore any price shocks driven by tariffs. "Given the high inflation we've experienced in recent years and the risk of unanchored long-term inflation expectations, I believe our top priority must be maintaining stable long-term inflation expectations," he said.
