Federal Reserve's Kashkari: Tariffs will raise the threshold for interest rate cuts
ChainCatcher news, according to Jinshi reports, Federal Reserve's Kashkari stated that considering the impact of tariffs on inflation, it is unlikely that the Federal Reserve will cut interest rates in the face of tariffs even if the economy begins to deteriorate. Kashkari mentioned that Trump's tariffs are "much higher and broader than expected," and he anticipates that these tariffs will reduce investment and economic growth, and "at least in the short term" push up inflation.Kashkari wrote, "The barriers to changing interest rates have increased in some way due to tariffs." "Given the importance of maintaining stable long-term inflation expectations, and the possibility that tariffs may boost near-term inflation, the threshold for cutting interest rates has become higher even in the context of a weak economy and potentially rising unemployment."He pointed out that recent indicators of inflation expectations have begun to rise, and the experience of high inflation in the U.S. over the years are reasons why the Federal Reserve may not be able to ignore any tariff-driven price shocks. "Given the high inflation we have experienced in recent years, and the risk of long-term inflation expectations getting out of control, I believe our top priority must be to maintain stable long-term inflation expectations," he said.