Fed's Musalem insists most inflation is not tariff-driven

Joshua Gibson FXStreet

Federal Reserve (Fed) Bank of St. Louis President Alberto Musalem insisted on Monday that most of the current inflation stubbornness facing US consumers today isn't a result of tariff pressures on imported goods, estimating that only around 10% of total inflation is being caused by sharp increases in import taxes on foreign goods.

Key highlights

Short term inflation expectations are somewhat high but long term expectations are anchored.
I expect inflation to be elevated for two or three quarters.
Monetary policy is between modestly restrictive and neutral; open-minded to future potential cuts but need to be cautious.
The risks to the labor market weakening have increased.
The impact of tariffs has been more muted than expected, only responsible for perhaps 10% of current inflation.
Long-term inflation expectations anchored.
The labor market continues to soften, but we're near full employment.
The Fed needs to tread cautiously.
Most inflation is not tariff-driven.

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

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