Barkin’s Remarks on Tariffs and Inflation

By Michael S. Derby

NEW YORK (Reuters) – Federal Reserve Bank of Richmond President Thomas Barkin stated on Thursday that tariffs are likely to increase inflation in the coming months. His comments emphasized that the U.S. central bank’s current policy is adequately positioned to address future challenges.

Barkin expressed concern about potential price pressures, stating, “I do believe we will see pressure on prices,” during a gathering with the New York Association for Business Economics. While acknowledging that tariffs have had a modest impact on measured inflation thus far, he anticipates more significant pressure as businesses prepare to pass on the costs of increased import taxes imposed by President Donald Trump.

He noted, however, that he does not expect the inflation impact to be as severe as experienced during the pandemic. There are indications that consumers might shift away from tariffed goods, which could mitigate some inflationary pressures.

Last week, the Federal Open Market Committee opted to keep the overnight target rate unchanged at 4.25% to 4.5%. Current uncertainties are keeping the central bank cautious, with expectations that tariffs will elevate inflation while hindering growth and job creation.

Barkin highlighted the risks the Fed faces regarding its job and inflation mandates. He refrained from detailing future monetary policy directions, instead emphasizing that various scenarios could influence the Fed’s interest rate targets.

While most officials remain in a wait-and-see mode, some Board of Governors members view tariffs as a one-time price increase and are open to cutting short-term interest rates at the upcoming late July FOMC meeting. Futures markets predict a rate cut at the September FOMC meeting.

After his speech, Barkin told reporters that policymakers should remain flexible and that current economic strength allows for patient tracking of developments. “When it does, we are well positioned to address whatever the economy will require,” he stated.

He also pointed out that since inflation was cooling before the onset of tariffs, rate hikes to combat price pressures don’t seem urgent. Overall, Barkin remarked that the current economic outlook appears favorable and that recent inflation data has been encouraging, with healthy job growth reported.

Fed’s Barkin says tariffs will start pushing up inflation

Barkin’s Remarks on Tariffs and Inflation

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Fed’s Barkin says tariffs will start pushing up inflation

Barkin’s Remarks on Tariffs and Inflation

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