Minneapolis Federal Reserve President Neel Kashkari said on Friday that the effect of trade tariffs imposed by the United States on all imports suggests prices will increase again and the Fed's task is to ensure it does not turn into long-term inflation. He stressed the importance of keeping inflation expectations steady in the long run and noted there are currently no indications they are rising.
In a CNBC interview, Kashkari said market conditions are "quite a ways away" from those seen during the coronavirus pandemic. However, he said tariffs put the Fed in a "difficult position" as they push inflation up and growth down and said the economic outlook will depend "a lot" on how quickly trade negotiations proceed and what deals the Trump administration makes with its trading partners. "If they drag on, it may take more time to reach the needed level of comfort around inflation to lower rates," he warned.
