Federal Reserve Governor: Tariff impacts may be more lasting, supporting a wait-and-see approach

ChainCatcher news, Federal Reserve Governor Adriana Kugler stated early Thursday that it is appropriate to maintain the current interest rate level until the risks of rising inflation subside. In her prepared remarks, she pointed out that changes in government policy, the recent stagnation in the cooling of inflation, and rising inflation expectations are key reasons for maintaining policy patience.

"As long as the risks of rising inflation persist, while economic activity and employment remain stable, I will support maintaining the current policy rate." Although the theoretical impact of a one-time tariff on inflation should be temporary, if it affects multiple areas of the economy and further raises inflation expectations, its impact may be more lasting.

Data shows that inflation levels have improved little recently since reaching a 40-year high in 2022. A University of Michigan survey indicated that long-term consumer inflation expectations rose to a 32-year high in March. Kugler emphasized the importance of stabilizing inflation expectations, noting that both short-term and long-term inflation expectations have risen recently.