Bostic Responds: Why the Fed Cannot Assume Tariff-Induced Inflation is a One-Time Effect
According to a report by Jinse Finance, when assessing the impact of tariffs on inflation, the standard economic model is straightforward: it should be a one-time price increase. However, Federal Reserve's Bostic stated on Tuesday that the uncertainty and rapidly changing policies of the Trump administration's tariffs make the situation more complex and less clear than textbooks suggest. "The textbook concept of tariffs is... tariffs are imposed once, and everyone knows what it is." "This is not the environment we have been in over the past few months, so there is a question of how people will react—adapting to a long-term change in tariff policy." Bostic said he is mainly concerned about how this long-term, gradual shift in tariff policy will affect business and consumer behavior. If businesses and households begin to anticipate ongoing tariff adjustments, it could lead to more persistent inflationary pressures. (Jin10)
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