Federal Reserve's Kashkari: Tariff negotiations may take months or years, supports holding steady

According to a report by Jinse Finance, Minneapolis Fed President Kashkari once again emphasized the necessity of maintaining caution amid trade conflict uncertainties and pointed out that defending inflation expectations is "crucial." On Tuesday, he stated at a Bank of Japan event in Tokyo that there is a "beneficial debate" among policymakers—whether to view the inflation impact of President Trump's tariffs as a temporary shock or as a long-term condition. Kashkari noted in his speech that tariff negotiations may take months or years to fully conclude, that the taxation of intermediate goods takes time to transmit, and that the risk of inflation expectations becoming unanchored may increase over time. He stated, "I will prioritize defending long-term inflation expectations." The Federal Reserve has kept interest rates unchanged at its three meetings so far this year and is expected to do the same at its next meeting in June. Prior to this, the Fed cut rates by a total of one percentage point in the last three months of last year. Economists generally expect tariffs to lead to inflation, but the extent depends on the scale of the tariffs and the degree of retaliation by other countries. Tariffs may drag down economic growth and lead to layoffs, potentially resulting in so-called "stagflation," putting the Fed in a dilemma: whether to maintain high interest rates to curb inflation or cut rates to support a sluggish economy. (Jin10)