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Fed's Kugler Sees Inflation as More Pressing Tariff Issue

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Bloomberg Apr 7 22:42 · 20.7k Views

Federal Reserve Governor Adriana Kugler expects there to be a “consequential” impact from President Donald Trump’s tariffs, but sees the trade policy currently having more pressing implications for inflation than for economic growth. Kugler spoke during a question-and-answer session Monday at Harvard University in Cambridge, Massachusetts.

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Transcript

  • 00:00 We got news on Taribs, additional news I would say on tariffs,
  • 00:04 just last one.
  • 00:05 Wednesday,
  • 00:06 which
  • 00:07 according to
  • 00:09 to private
  • 00:10 forecasters and private analysts,
  • 00:13 should raise the effective rate somewhere between 21
  • 00:17 to
  • 00:18 get tires to an effective level of 21% to 26%.
  • 00:22 That's up from the 2.6% where we started at the beginning of the year.
  • 00:28 So
  • 00:29 it should be consequential.
  • 00:32 On the one hand,
  • 00:34 we have already started seeing
  • 00:37 some increases in prices.
  • 00:39 So
  • 00:41 as I mentioned,
  • 00:42 goods inflation
  • 00:44 has moved into positive territory.
  • 00:46 It's still very low,
  • 00:47 but it's moved up
  • 00:49 some components of services inflation, which I pay a lot of attention to because these are market based services,
  • 00:57 so very well measured.
  • 00:58 Data
  • 00:59 shows also that there has been a bit of a reversal, again, very small for now,
  • 01:04 but they are starting to move out.
  • 01:06 We have one tool
  • 01:09 to meet these two goals,
  • 01:11 which means, right, if we tighten policy,
  • 01:14 we may weaken the economy.
  • 01:16 If we ease policy, on the other hand,
  • 01:19 we may
  • 01:20 drive inflation higher.
  • 01:22 So we have to be
  • 01:23 very careful in how we navigate this.
  • 01:27 But my
  • 01:28 the takeaways that I view
  • 01:30 right now
  • 01:32 inflation as being more pressing
  • 01:35 as far as the facts of tires that we're already seeing
  • 01:38 and maybe this from loading is going to help at least in terms of keeping economic activity at the beginning of the year.