Fed's Barkin says tariffs will start pushing up inflation
'I do believe we will see pressure on prices,' Barkin said in the text of remarks prepared for delivery before a gathering of New York Association for Business Economics.
When it comes to tariffs and their impact on price pressures, 'to date, these increases have had only modest effects on measured inflation, but I anticipate more pressure is coming,' amid comments from businesses that they expect to pass at least some of the rise in import taxes imposed by President Donald Trump.
'That said, I don't expect the impact on inflation to be anywhere near as significant as what we just experienced' during the pandemic and there are signs that consumers will try to move away from tariffed goods, which could limit some of the upsides for higher inflation.
Last week, the Fed's most recent gathering of the rate-setting Federal Open Market Committee saw officials leave their overnight target rate unchanged at between 4.25% and 4.5%. Uncertainty over the outlook is keeping the central bank on the sidelines amid expectations the tariffs will push up inflation this year while depressing growth and hiring.
In his remarks, Barkin noted the Fed is facing risks on both its job and inflation mandates. Citing the uncertainty of the outlook Barkin declined to say where monetary policy is heading.
But he said, 'given the strength in today's economy, we have time to track developments patiently and allow the visibility to improve,' adding, 'when it does, we are well positioned to address whatever the economy will require.'
Barkin said that as the economy now stands things look pretty good and recent inflation data was 'encouraging.' He said job growth has been 'healthy.'
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