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The top official of the federal reserves warned that it would be a “mistake” to underestimate the potential for the planned Donald Trump tariffs to encourage prices.
Austan Giftsbee, President of Chicago FED, said on Wednesday that the prone to the central bank was to follow the “pure economic theory” and neglect the shock supply such as “dangerous”.
Now they have faced the “series” of challenges in the supply chain, Gollsbee said, including strikes and natural disasters. IN economy Also faced with “threat large tariffs And the potential for escalating trade war, ”he added.
“These threats are not the scale of what happened during the pandemic, but the transmission of their potential consequences would be a mistake,” he said.
The comments of one of the best officials of the Fed and a member of the Central Bank Powling Council came just days after the president threatened to impose 25 percent of tariffs on the two largest American trading partners, Mexico and Canada.
Trump said on Monday afternoon that they were postponing to Canada and Mexico until March 1, but that he hit China with 10 percent tariffs, making Beijing to announce his tariffs to some American imports.
Golsbee’s comments contrary to Feda Jay Powell’s President, who said last week that the footsteps will have to “wait and see” influence tariffs before deciding how to influence their interest rates.
After deciding to retention of interest rates ranging from 4.25 to 4.5 percent, Powell said, “We do not know what the tariff will be[ed]We do not know how long or how long, what countries, we do not know about retaliation, we do not know how to convey to consumers through economics. It really remains to be seen. ”
However, most private economists expect the tariffs to be inflated, and expectations for the reduction of the Fed rates have dropped significantly since the fall because the price increase remained above the goal of the central bank.
Gololsbee said the “irresistible” pandemic lesson was that central bankers should not neglect shock on the supply sidesaying that these were “the most important inflation initiators in the last five years.”
“We have seen in the Coidid Times that the more complex supply chain is, the longer it takes to manage,” he said in the prepared notes.
