Barclays: The Fed's assumption of "temporary" pressure from tariffs may catch it off guard in the future

ChainCatcher news, according to Jinshi Data reports, Barclays economists stated in a report that Federal Reserve Chairman Powell's comments on the "transitory" nature of tariff-related price pressures, as well as his disregard for inflation expectations, could catch the Federal Reserve off guard, just like during the pandemic.

Powell clearly stated on Wednesday that the committee assumes that tariff-related price pressures will be temporary, although it takes a "wait-and-see" attitude regarding whether these price pressures will play out in this way.

Barclays stated, "His tone seems overly confident." The bank added that Powell is also less willing to consider taking preemptive rate cuts to provide a buffer for the economy in the event of a severe deterioration in economic activity. Weak data indicators such as consumer confidence suggest this.

They added that downplaying such risks could undermine the Federal Reserve's credibility, as it seems to be walking a very narrow path, with each step carrying dual risks.