The Governor of the Federal Reserve Christopher Waller speaks during the annual Clearing House conference in New York, November 12, 2024.
Brendan McDermid Reuters
Federal Reserve Governor Christopher Waller said on Monday that he expected that the impact of President Donald Trump's tariffs on prices are “temporary”, covering the date that the central bank caught trouble during the last inflation.
“I already hear the howling that it must be a mistake, taking into account what happened in 2021 and 2022. But only because it did not work, it does not mean that you should never think again,” said Waller in political speech in St. Louis, who compared his view of inflation to the controversial playing football “Tush Push”.
Waller said that by determining two scenarios regarding duties, Waller said that larger and longer tariffs would initially bring a greater increase in inflation to a range from 4% to 5%, which would eventually leave as the growth and increase in unemployment would increase. In the smaller script, the inflation tariff will reach about 3%and then fell.
He said that in both cases he would still see the reduction of Fed interest rates, and time was the only question. Waller added that larger tariffs can force cutting to growth growth, while smaller duties can allow the limitation of “good news” this year.
“Yes, I say that I expect increased inflation to be temporary, and” temporary “is another word for transitional,” he said. “Despite the fact that the last increase in inflation starting in 2021 lasted longer than me and other decision -makers were initially expected, my best judgment is that higher tariff inflation will be temporary.”
The “temporary” term returns to the inflationary jump in 2021, which Fed officials and many economists expected to be released after the supply chain and demand factors related to the standardized Covid-19 pandemic.
However, prices continued to grow, reaching the highest since the beginning of the 1980s and requiring a series of dramatic foot increases. While the inflation has gone significantly, since the Fed began to raise in 2022, it remains above the target of the central bank. The Fed reduced the rate of comparative loans by a full percentage point at the end of 2024, but this year did not reduce further.
Waller, Trump's denominator during the first term of the president, Waller used a football analogy to explain his views on the “transition” inflation. He quoted the game “Tush Push” Philadelphia Eagles, which the team used to get a perfect impact on short situations and a goal line.
“You are Philadelphia's eagles and it is fourth down and a few inches from the goal line. You call Tush pushing, but he doesn't convert to lead the ball,” he said. “Because you failed to expect, does this mean that you should not call Tush pushing the next time you face a similar situation? I don't think so.”
Waller estimated that Trump has one of the two tariff goals: maintaining high fees and converting the economy or using them as negotiating tactics. In the first case, he sees that the growth slows down “to creep”, while the unemployment rate increases significantly. If the tariffs are negotiated, he believes that influence on inflation is “much smaller”.
In the second case, he said: “One of the largest shocks affecting the US economy for many decades” is to impede forecasting and politics. FED officials will have to “keep flexibility” in deciding about the future path.
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