Federal Reserve Monetary Policy Report: It Is Too Early to Assess the Economic Impact of Tariffs

The latest monetary policy report released by the Federal Reserve to Congress on Friday states that the U.S. inflation rate has risen and labor market conditions remain robust. However, it suggests that the impact of President Trump’s tariff measures may only just be beginning to emerge, and reiterates the Fed’s view that it can wait for greater clarity before taking action. The Fed noted in the report: “The effect of this year’s increase in import tariffs on U.S. consumer prices is highly uncertain, as trade policy continues to evolve, and it is too early to assess how consumers and businesses will respond. Although the impact of tariffs cannot be directly observed in official consumer price statistics, the net price change patterns for various goods this year suggest that tariffs may be one of the reasons for the recent rebound in goods inflation.” The report also states that despite the uncertainty, the financial system has remained “resilient.” (Jin10)