Federal Reserve Bank of New York President John Williams said on Friday that United States President Donald Trump's tariffs are expected to increase inflation in the country to between 3.5% and 4% this year.
"Given the combination of the slowdown in labor force growth due to reduced immigration and the combined effects of uncertainty and tariffs, I now expect real GDP growth will slow considerably from last year's pace, likely to somewhat below 1 percent. With this downshift in the pace of growth, I expect the unemployment rate to rise from its current level of 4.2 percent to between 4-1/2 and 5 percent over the next year," Williams said at a Puerto Rico Chamber of Commerce event, noting that Fed's "current modestly restrictive stance of monetary policy is entirely appropriate."
Williams also claimed that despite the recent increase in short-term inflation expectations, the long-term expectations remained "well anchored."
