Minneapolis Federal Reserve President Neel Kashkari said Sunday that President-elect Donald Trump’s tariff proposals could worsen long-term inflation if global trade partners were to strike back.
One-time tariffs, Kashkari said on CBS’ “Face the Nation,” “shouldn’t have an effect long run on inflation.” “The challenge becomes, if there’s a tit for tat and it’s one country imposing tariffs and then responses and it’s escalating.
That’s where it becomes more concerning, and, frankly, a lot more uncertain,” Kashkari said.
“We’ve made a lot of progress in bringing inflation down,” Kashkari said.
Trump and his backers like billionaire Tesla CEO Elon Musk have also been outspoken about their desire to give the president input on Fed policy decisions.
Neel Kashkari, president of the Minneapolis Federal Reserve, warned Sunday that if international trading partners retaliated against President-elect Donald Trump’s tariff proposals, long-term inflation could worsen.
Kashkari stated on CBS’ “Face the Nation” that one-time tariffs “shouldn’t have an effect on inflation in the long run.”. “.”.
“The problem arises when one nation imposes tariffs on another, and other countries respond, and the situation escalates.”. At that point, it becomes more worrisome and, to be honest, much less certain,” Kashkari stated.
When Trump implemented a number of import taxes on Chinese goods during his first term, the country responded with its own set of tariffs on the U.S., effectively starting a trade war. S.
Imposing universal tariffs on all imports from all nations, with a targeted 60 percent rate on China, is one of Trump’s main economic agenda items for his second term.
Since inflation has only recently started to decline from its pandemic-era highs, economists, Wall Street analysts, and business executives have frequently voiced concerns about the inflationary effects of that tough trade policy.
“A lot of progress has been made in reducing inflation,” Kashkari stated. I mean, I’m not ready to announce victory just yet. We have to complete the task, but for now, we’re doing well. “”.
As inflation gets closer to the Fed’s 2 percent target, the Fed continued to loosen monetary policy on Thursday by passing its second consecutive interest rate cut. Another cut is anticipated in December, according to Kashkari, but it will rely on “what the data looks like” at that time.
The Fed is still taking a “wait and see” stance before changing its policy, Kashkari said, referring to Trump’s other significant policy proposals, such as a comprehensive plan to deport immigrants, because the inflation threat is still unclear.
Additionally, Trump and his supporters, such as Elon Musk, the billionaire CEO of Tesla, have made no secret of their desire to consult the president on Fed policy decisions. The central bank considers its political independence to be a fundamental characteristic that enables it to solely influence monetary policy in response to the state of the U.S. S. economy, not incentives for elections.
Kashkari, however, stated that he is not worried about politics influencing Fed decisions.
“I have no doubt that we will keep our attention on our economic jobs,” he stated. That ought to be the driving force behind our actions, and it is. “.”.
