CoinVoice has recently learned that, according to Jinshi, Trump has promised to implement comprehensive tariffs on imported goods upon returning to the White House. During his first term, Federal Reserve staff simulated similar scenarios and concluded that inflation would accelerate but not last long. Ultimately, as tariffs were determined to be 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 fully overcome the post-pandemic price increase issue. Second, the Federal Reserve has faced serious criticism for describing that price increase as 'temporary.' Therefore, Powell and his colleagues are least willing to downplay the price surge, believing it will not last.
Deutsche Bank's U.S. economist Justin Lederer stated, "Even a price increase that is seen as 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 had hoped. They must acknowledge the actual inflation rate. Perhaps we can avoid terms like 'temporary' or 'transitory' and say something like 'inflation has risen due to tariff effects,' clearly indicating that this is a result of tariffs and not necessarily demand-driven." [Original link]