Fed Governor: Tariff impact may be more lasting, supports keeping policy unchanged

Odaily News Fed Governor Adriana Kugler said early Thursday that it was appropriate to maintain current interest rates until upside risks to inflation subside. In her prepared remarks, she cited changes in government policy, a recent stagnation in the cooling of inflation, and rising inflation expectations as key reasons for policy patience.
"As long as upside risks to inflation persist and economic activity and employment remain stable, I would support maintaining the current policy rate." Although in theory the impact of a one-off tariff on inflation should be short-lived, its impact could be more lasting if it spreads across multiple sectors of the economy and further pushes up inflation expectations, the Fed said.
Data shows that inflation has improved only slightly recently after reaching a 40-year high in 2022. A University of Michigan survey showed that consumers' long-term inflation expectations climbed to a 32-year high in March. Kugler focused on the importance of stabilizing inflation expectations, pointing out that both short-term and long-term inflation expectations have risen recently. (Jinshi)