Federal Reserve (Fed) Bank of Boston President Susan Collins noted on Tuesday that the Fed still expects some kind of impact from the Trump administration’s tariffs. Collins’ statement was supported by US Consumer Price Index (CPI) inflation figures that were released on Tuesday, which show price pressures have resumed climbing exactly when tariff critics said they would.
Key highlights
Solid economy gives Fed time to decide its next interest rate move.
It is challenging to set monetary policy right now amid uncertainty.
It’s time for Fed to be ‘actively patient’ with monetary policy.
Tariffs to boost inflation over second half of 2025, core inflation around 3% by year’s end.
Tariffs will slow hiring but ‘not necessarily by a large amount’.
Strong business household balance sheets may blunt tariff pain.
Good profit margins may limit tariff pass-through.
Tariffs will weigh for atime on what is now strong economy.
Economy is currently in a ‘good place’ overall.
Core goods inflation showing some signs of tariff impacts.