Catenaa, Thursday, April 24, 2025- US Federal Reserve sees no urgency in changing policy rates and seeks more clarity to determine the impact of Trump’s tariffs on the economy.
Federal Reserve Governor Christopher Waller said in a Bloomberg interview on Thursday that given the tempo at which the Trump administration’s import taxes shift, it wouldn’t be until sometime this summer that some sense of how this is playing out will start to emerge, suggesting no imminent change in monetary policy.
“I don’t think you’re going to see enough happen in the real data in the next couple of months, until you get past July,” Waller said. “When you get to the second half of the year, I think we’ll start having better ideas about what’s going to happen with the tariff world that the administration is considering.”
Waller said that he believes the tariffs will have a one-time effect on price pressures and if it plays out like that and inflation does not prove enduring that suggests Fed policy may not need to react.
“The economics tells me that the tariffs are a one-time price level effect that’s going to pass through,” Waller said. Some of the inflation impact of higher import prices would be offset by weakening consumer demand, falling employment and negative hits to household wealth, he said, so when it comes to the rising inflation, “it may not be as high as people think.”
Waller said that navigating a one-time price jump without reacting would be challenging for the central bank given the pandemic experience of believing the inflation surge then was temporary, only to find out it wasn’t.
“It’s going to take some courage to stare down these tariff increases in prices with the belief that they are transitory,” Waller said. But “the question is, what are the things that will cause this inflation to persist through the initial tariff increases? And I just have a hard time seeing exactly what that would be.”
The US stocks were up on Thursday continuing its gain from the previous two sessions as Fed officials ruled out a rate cut anytime soon. The Dow Jones Industrial Average rose 0.6% by midday. The benchmark S&P 500 gained 1.26% while the tech-heavy Nasdaq Composite gained 1.75%
