Deep Tide TechFlow news, on December 4th, according to Jin Ten reports, Trump promised to implement comprehensive tariffs on imported goods upon returning to the White House. During his first term, Federal Reserve staff simulated a similar scenario and concluded that inflation would accelerate, but would not last long. Since it was ultimately determined that tariffs were a drag on the economy, they recommended lowering interest rates as the best remedy.
However, there are two main obstacles to taking this approach now. First, the Federal Reserve has not yet fully overcome the issue of post-pandemic price increases. Second, the Federal Reserve has faced severe criticism for describing that price increase as 'temporary.' Therefore, what Powell and his colleagues are least inclined to do is to downplay the surge in prices, believing that they will not be persistent.
Justin Widner, an economist at Deutsche Bank in the U.S., stated, 'Even a price increase considered temporary could prompt the Federal Reserve to raise interest rates or at least maintain a wait-and-see attitude, preventing them from significantly cutting rates as they originally hoped. They must acknowledge the actual inflation rate. Perhaps words like 'temporary' or 'transitory' could be avoided, and instead say something like 'inflation increase due to tariff effects,' clearly indicating that this is a result of tariffs and not necessarily demand-driven.'