Federal Reserve's Kashkari: Tariff negotiations may take months or years, supports holding steady
ChainCatcher news, according to Jinshi reports, Minneapolis Fed President Kashkari reiterated the necessity of maintaining caution amid the uncertainty of trade conflicts, emphasizing that defending inflation expectations is "crucial." On Tuesday, he stated at a Bank of Japan event in Tokyo that there is a "beneficial debate" among policymakers—whether to view the inflation impact of U.S. President Trump's tariffs as a temporary shock or as a long-term condition.In his speech, Kashkari pointed out that tariff negotiations may take months or years to fully resolve, that the taxation of intermediate goods takes time to transmit, and that the risk of inflation expectations becoming unanchored may increase over time. He stated, "I will prioritize defending long-term inflation expectations."The Federal Reserve has kept interest rates unchanged in all three meetings so far this year, and it is expected to do the same at the next meeting in June. Prior to this, the Fed cut rates by one percentage point in the last three months of last year.Economists generally expect tariffs to lead to inflation, but the extent of this is dependent on the scale of the tariffs and the level of retaliation from other countries. Tariffs could weigh on economic growth and lead to layoffs, potentially resulting in what is known as "stagflation," putting the Fed in a dilemma: whether to maintain high interest rates to curb inflation or to cut rates to support a struggling economy.
