Federal Reserve's Musalem: The Fed should be vigilant against persistent inflation driven by tariffs
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Federal Reserve's Musalem: The Fed should be vigilant against persistent inflation driven by tariffs
According to Jinshi Data, Federal Reserve's Musalem said he is closely monitoring whether rising short-term inflation expectations will seep into long-term expectations, which could make fighting inflation more difficult and reduce the Fed's flexibility in responding to labor market weakness. He noted there is high uncertainty regarding the effects and timing of tariffs and other new policies, and that a clear possibility of renewed inflation acceleration remains, even if the job market weakens. He stated that the Fed's policy is in a favorable position and should remain vigilant. "I am cautious about the assumption that the impact of higher tariffs on inflation will be merely temporary or limited," he said. "I believe it is appropriate for monetary policy to 'counteract' second-round effects, although in practice, distinguishing between underlying inflation and the direct, indirect, and second-round effects of tariffs may be challenging."
Navigating Web3 tides with focused insightsTechFlow news, April 11 — According to Jinshi Data, Federal Reserve's Musalem said he is closely monitoring whether rising short-term inflation expectations will seep into long-term expectations, which could make fighting inflation more difficult and reduce the Fed's flexibility in responding to labor market weakness. He noted there is a high degree of uncertainty regarding the effects and timing of tariffs and other new policies, and that there remains a "clear possibility" of renewed inflation acceleration even if the job market weakens. He stated that the Fed's policy is in a favorable position and should remain vigilant. "I am cautious about the assumption that the impact of higher tariffs on inflation will be merely transitory or limited," he said. "I believe it is appropriate for monetary policy to 'counteract' second-round effects, although in practice, distinguishing between underlying inflation and the direct, indirect, and second-round effects of tariffs may be challenging."
