Trump Tariffs May Fuel Inflation, Says Boston Fed President
Boston Federal Reserve President Susan Collins warned on Monday that the Trump administration's tariffs could push up inflation.
In an interview with CNBC, Collins said, "The kind of broad-based tariffs that were announced over the weekend... you would expect to have an impact on prices."
Trump on Saturday imposed tariffs on goods from Mexico, Canada, and China. Canada has retaliated with its own tariffs on U.S. products.
Collins noted that there's limited historical data on the economic impact of such tariffs.
'NO URGENCY' FOR FED
The Federal Reserve, which cut interest rates last year, held them steady this month due to uncertainty over the economic outlook.
Fed Chair Jerome Powell said the Fed needs to assess the impact of the tariffs before making policy adjustments.
Collins, a voting member of the Fed's rate-setting committee, said the Fed's current policy is appropriate for the current economic climate.
She said the Fed is "patient" and "careful" and sees "no urgency" for additional rate changes.
IMPACT ON INFLATION
Collins acknowledged that the tariffs could have a short-term inflationary impact. However, she suggested the Fed may not respond if inflation expectations remain stable.
"That's a short-term impact on inflation," Collins said. "Unless there are additional impacts that... you'd expect the Federal Reserve would try to look through."
The ultimate policy response to the tariffs is uncertain, she added.