Wells Fargo: Fed may not take inflation caused by Trump's tariff policy too seriously
On January 8, the Trump administration's radical tariff policy could lead to further inflation, but economic models show this will be a one-time rise in the price level, not a long-term inflationary spiral.
Wells Fargo economist Jay Bryson said this could persuade the Federal Reserve to be more patient in addressing the inflation caused by tariffs, especially as the labor market continues to slow. His view supports Wells Fargo's baseline expectation that the Federal Reserve will cut interest rates three more times this year, each by 25 basis points. But Bryson warned that if the trade war becomes more protracted, such as a series of tit-for-tat international retaliation, the Federal Reserve may have to take the inflationary consequences more seriously.
