- There is a healthy debate among Fed policymakers on whether to look through inflationary effects of tariffs
- It may take months or years for trade negotiations to fully conclude
- And there could also be tit-for-tat tariff increases throughout the whole ordeal
- It will take time for the full effect of tariffs to pass through to final prices
- These arguments support a stance of maintaining the policy rate, which is likely only modestly restrictive now, until there is more clarity on the path for tariffs and their impact on prices and the economy
All of this just reinforces the points he made from yesterday here. And it continues to suggest that the Fed is still in wait and see mode when it comes to policymaking at the moment.
This article was written by Justin Low at www.forexlive.com.
