Christopher Waller, a member of the U.S. Federal Reserve, dismissed concerns about inflation risks due to the extensive tariffs imposed by the Trump administration, stating that the impact would be limited.
On Monday, the Financial Times (FT) reported that during an event in Australia, Waller believed that tariffs would only lead to a slight, temporary price increase.
FT analyzed Waller’s comments, which indicate his belief that the Trump administration’s trade policies will not affect the Fed’s monetary policy.
As the U.S. economy shows growth and inflation remains above the target level, the Fed hesitates to cut interest rates further.
The uncertain outlook due to the Trump administration’s trade policies makes the Fed cautious about rate cuts.
The Federal Open Market Committee (FOMC) within the Fed unanimously favors freezing U.S. interest rates in the short term.
FT noted a divergence of opinions among senior Fed officials regarding the tariff war. Unlike Waller, Austan Goolsbee, President of the Federal Reserve Bank of Chicago, and Loretta Mester, President of the Federal Reserve Bank of Cleveland, are worried about potential inflation.
Waller stated that while there is currently no data to support a rate cut, he anticipates inflation will decline over the upcoming quarters since companies raised prices at the beginning of the year.
January’s U.S. consumer price index rose unexpectedly by 3% year-over-year, indicating that the Fed cannot lower rates immediately.
Waller mentioned that he would assess whether the inflation trend would follow the historical pattern of price decline after the first quarter of inflation based on data released in the coming months.
“If 2025 plays out like 2024, rate cuts would be appropriate at some point this year,” he said.
Waller also hinted that despite uncertainties regarding economic policies from the White House, the current Fed monetary policy will not remain unchanged.
He indicated that if the forthcoming data supports a rate cut or freeze, the Fed would proceed regardless of the clarity of the Trump administration’s policies.
