Federal Reserve officials worry about tariff policies, with inflation and economic impacts becoming the focus

According to the Zhitong Finance APP, Federal Reserve officials typically avoid commenting on fiscal policy, but the uncertainty brought about by the Trump administration's tariff policies has forced them to consider its potential impact on the economy and inflation.

Recently, several Federal Reserve policymakers emphasized that the broad tariff threats from the Trump administration against major trading partners such as Canada, Mexico, and China have increased uncertainty in the economic outlook. They are particularly concerned about the potential impact of tariffs on inflation. If tariffs lead to sustained price increases, the Federal Reserve may need to maintain high interest rates for a longer period.

Among them, Chicago Fed President Austan Goolsbee pointed out at an auto seminar in Detroit that high tariffs and the possibility of escalating trade wars pose a significant threat to supply chains. He emphasized that if inflation rises or the economy stagnates, the Federal Reserve will face a difficult choice and will need to determine whether inflation is due to an overheating economy or tariff policies. Goolsbee also mentioned that the uncertainty surrounding tariff policies makes it very complex to assess their specific impact on the economy.

Boston Fed President Susan Collins also stated that the Federal Reserve has studied the potential impact of large-scale tariffs. She noted that tariffs involve multiple aspects and have second-round effects, making it difficult to accurately assess their impact on prices. Collins emphasized that if tariffs are temporary, the Federal Reserve may choose to "look through" their effects, but if the impact persists, the Federal Reserve will have to reassess its policies.

In addition to Goolsbee and Collins, other Federal Reserve officials, such as Philadelphia Fed President Patrick Harker and Atlanta Fed President Raphael Bostic, have also expressed concerns about the potential inflationary effects of tariffs and emphasized that they will closely monitor the long-term effects of these policies.

On January 29, the Federal Open Market Committee (FOMC) decided to keep the benchmark interest rate unchanged in the range of 4.25% to 4.50% to assess the changing economic conditions. Federal Reserve Chairman Jerome Powell stated at a post-meeting press conference that it is still too early to make judgments about fiscal policy (including tariffs) and that they need to wait for clearer policies before assessing their impact on the economy.

Powell stated, "We are not yet clear on how tariffs, immigration, fiscal policy, and regulatory policies will evolve in the future. I believe we can only reasonably assess their potential impact on the economy once these policies are clearly articulated."

The market generally expects that the Federal Reserve will keep interest rates unchanged in the coming months to observe the actual impact of tariff policies. Economists believe that tariffs may push up prices, but their impact on long-term inflation remains uncertain. Kathy Jones, Chief Fixed Income Strategist at Charles Schwab, pointed out that tariffs may bring price shocks but could also be offset by the appreciation of the dollar.

Overall, Federal Reserve officials have expressed concerns about the Trump administration's tariff policies, believing that they may have complex effects on inflation and economic growth. Although the current impact of tariffs on prices is not yet clear, the Federal Reserve is prepared to flexibly adjust monetary policy based on economic data and policy changes