Fed’s Jefferson: Tariffs could lead to higher inflation

Fed Vice Chair Philip Jefferson said that recent inflation numbers suggest the Fed is still making headway toward its 2% target. However, he cautioned that the outlook has become less certain, with the threat of new import tariffs potentially pushing prices higher.

Key Quotes

• Current moderately restrictive policy rate in a good place to respond to economic developments.
• Recent inflation data consistent with further progress toward 2% goal, but future path uncertain due to tariffs.
• Watching closely for signs in hard data of weaker activity.
• Tariffs could lead to higher inflation, still uncertain if impact would be temporary or persistent.
• Expect lower growth due to trade policy but expect economy to still expand over the year.
• First quarter GDP data overstated deceleration in activity.
• Labour market still solid.
• Whether tariffs create persistent inflation depends on implementation, response of supply chains, other factors.