Insignia Consultants | Fed officials expect tariffs to boost prices; White House downplays risk
Fed officials expect tariffs to boost prices; White House downplays risk
AMELIA ISLAND, Florida, May 20 (Reuters) - Federal Reserve officials said on Tuesday that higher prices are coming on the back of rising U.S. import tariffs and counseled patience before making any interest rate decisions before it is clear whether the inflation shock will be fleeting or more persistent.
"One thing that we've heard is that a lot of the tariff impact to date has actually not shown up in the numbers yet. There's been a lot of front-running, building inventories and all those sorts of things. And we are hearing from an increasing number of businesses that those strategies ... are starting to run their course," Atlanta Fed President Raphael Bostic said on the sidelines of a conference in Florida.
"If these pre-tariff strategies have run their course, we're about to see some changes in prices, and then we're going to learn how consumers are going to respond to that," said Bostic, who now expects the U.S. central bank will have to wait longer for clarity about the economy's direction and make any changes to interest rates.
"We should wait and see where the economy is going before we do anything definitive," said Bostic, who anticipates only a single quarter-percentage-point cut in the Fed's policy rate this year and several months on the sidelines waiting for the effect of Trump administration policies to become clear.
