Inflation Risks in the USA: Muted Effect of Tariff Policy

The development of inflation in the US economy remains a central issue, as Raphael Bostic, President of the Federal Reserve Bank of Atlanta, recently emphasized. Despite the expectation that import tariffs during the former presidency of Donald Trump would drive up prices, the actual impact has so far been less severe, Bostic said during a live-recorded podcast. Entrepreneurs report noticeable cost pressures that could increasingly affect consumer prices. Bostic warns that more could be in store for us regarding inflation. The import tariffs, he added, have so far generated less inflationary pressure than originally forecast, but the necessity to keep a watchful eye on inflation expectations remains. Close monitoring of consumer sentiment and business plans is essential in this situation. Bostic avoided direct statements on monetary policy in light of the recent interest rate cut by a quarter percentage point to a range of 4% to 4.25%. This measure was taken in view of the stagnant labor markets and their possible reaction to lower short-term credit interest rates. Bostic underscored the complexity of the current labor market situation and reported that companies, due to this uncertainty, are currently neither actively hiring nor laying off employees.