Federal Reserve governor Adriana Kugler warned on Monday that new import tariffs could raise prices and slow down the economy by reducing the purchasing power of households and cuts.
Speaking in Dublin in Dublin in Ireland, Kugler said that the steeper responsibilities acted like an offer shock. “Higher tariffs in US imported goods can affect our macroeconomic through many channels … I think they mainly raise prices and reduce economic activities,” he told the audience.
Her remarks Landing the same morning Washington and Beijing agreed to alleviate their trade fight. Both sides set a 90 -day window to reduce the rate of tariffs by 115 percentage points, while long -term rules are discussed. US liabilities that have reached 145 percent slide to 30 percent and Chinese resistance fees fall from 125 % to 10 percent.
“Trade policy is evolving and likely to continue shifting, even this morning,” Kugler said.
The governor sees that inflation risks are still high and support the survival of interest rates. “Ultimately, I see that the United States is likely to experience smaller growth and greater inflation,” he added.
His caution reflects Friday's comments from Michael Barri and New York Fed President John Williams, who also marked higher inflation, weaker production and possible unemployment growth.
Chairman Jerome Powell expressed similar caution on Wednesday, saying that he was waiting for clearer data before changing the course. On this day, all officials voted to keep the destination range of 4.25 percent up to 4.50 percent, and the level reached a complete point at the end of 2024.
The White House has increased the boost of interest rates in the future as a slowing of the economy as a pillow. On Thursday, President Donald Trump extended the demand for the mitigation of a political attitude on Thursday, which refers to Powell to lower interest rates, “because he is not in love with me.” In social media, Trump named Fed the chief “too late Jerome Powell” and wrote that Powell is a stupid who has no idea. ”
The news of the 90 -day break helped on Wall Street, with the shares rising less to trade. The yield of the bonds slipped, while the dollar weakened slightly against the main currencies as traders calibrated their prospects. Analysts said the gesture signaled to both countries who want to avoid disturbing escalation during this quarter talks.
Kugler notes that the average tariffs are still high after the cuts
However, Kugler said that the economy is hit when the tariffs remain close to their new level and that the uncertainty itself is already shaping business plans through curvature, sentimental and expectations. He noted that even after the cuts, the average tariff is “much higher” than at any time for many decades.
If the duties go beyond where they stood a year earlier, he warned that economic growth would weaken. According to him, the higher costs would reduce inflation -customized income and raise business costs, fifth households less goods and companies to order fewer inputs.
Over time, it can damage productivity. Companies that pay more for parts and face softer demand can reduce investments and accept less efficient production compounds.
In the near future, the steeper invoices will be aimed at consumer prices and the cost of items used in factories. Imports account for only about 11 percent of gross domestic product, but many of the tariffs of the supply chains such as aluminum and steel can.
Kugler pointed out to Dallas Fed's latest Texas leader, in which 55 percent of the companies said they intended to exceed most or all tariff costs for customers. Of these, 26 % of them were to raise prices to announce tariffs and 64 percent should do so within three months. “This suggests that the rise in prices may soon occur,” she said.
He also quoted a consumer survey at the University of Michigan, where long -term inflation expectations have reached the highest rating since June 1991.
“Because inflation and employment are potentially moving in opposite directions, I follow the developments closely when I have a future policy,” Kugler concluded.
Cryptopolitan Academy: Soon – a new way to earn a passive income with a defi in 2025. For more information
