Federal Reserve's Barr: Tariffs raise inflation and slow down the economy, the Fed may be in a dilemma

ChainCatcher news, according to Jinshi reports, Fed's Barr stated that Trump's trade policy could push up inflation, lower economic growth, and increase unemployment later this year, which may present policymakers with a tricky decision on which issue to address.

Barr said, "The scale and scope of recent tariff increases are unprecedented, and we do not know their final form; it is too early to say how they will affect the economy." However, he noted that the risks are evident. "In my view, higher tariffs could lead to disruptions in global supply chains and exert persistent upward pressure on inflation," he stated.

He also pointed out that businesses need time to adjust their distribution networks. Some suppliers, especially small businesses, may not be able to adapt quickly enough and could go out of business, exacerbating the chaos in the supply chain.

Barr said, "I am equally concerned that as the economy slows, tariffs will lead to rising unemployment." "Therefore, if we see both inflation and unemployment rising simultaneously, the Fed may find itself in a dilemma."