President Boston Feda says inflation caused by a tariff ‘looks inevitable’. Suspects that the central bank will maintain rates longer

• In his first public remarks Because the central bank left interest rates unchanged, the president of the Federal Boston reserves Susan Collins said that the tariffs would encourage inflation, but that may not feel long. She repeated President Jerome Powell, who said that inflation caused by a tariff could be transient, but admitted that there was a threat to that expectation.

Before the victory of President Donald Trump, some economists warned The tariffs he promised on the trace of the campaign could be inflated. The president of the federal reserves is now arranged.

“It seems inevitable that the tariffs will increase inflation in the short term,” Susan Collins Federal Reserve President said on Thursday during an interview of fire, according to Bloomberg. “My kind of modal look would be that it could be short -lived.”

However, she confessed to a threat to such a forecast. “There are risks about it, and depending on how things are going, it can be more persistent and greater increase,” Collins said.

This was the first time Collins spoke publicly since the last meeting of the Fed on which left interest rates unchanged between 4.25% and 4.5%. Collins seems to have echoed the comments of President Jerome Powell at his press conference after the announcement, where he said that the inflation caused by a tariff could be “passable“, And that was his basic case. The central bank is currently accepting the holding of waiting and seeing it, not changing its policies on the basis of burning feelings. Collins suspects that Fed will maintain interest rates longer, according to Reuterswhich she called the appropriate action plan.

The last time the central bank called a transient inflation, it was wrong. The pandemic era inflation became getting warmer and warmer until it reached four decades ago almost three years ago. Fed increased interest rates to tame burning inflation. Once there were coolant signs, the Fed began to reduce rates. But now, the central bank has left an untouched interest rate for the second time this year because of its uncertainty that comes from a political vortex in again, outside the tariff. Still, inflation entered cooler than predicted in February. Consumer prices have increased 2.8% compared to a year ago, but the tariffs and trade wars did not come true in data.

At this point, there seems to be two arguments when it comes to discussing tariff inflation. On one side, tariffs It can cause a disposable shock of the price or it could be a much more serious long -term blow to prices that harms consumers. What is clear is when companies face additional tax on imported goods, they transfer these costs to consumers. Because of this, economists believe that the access to the central bank is appropriate or risky.

“The risk is that the tariffs can have a longer effect on inflation if additional tariffs are added later this year,” said Apollo Torsten Economist Chief Economist Wealth After the Fed decision.

But Moody’s main economist Mark Zandi seems to feel different.

“The inflation caused by a tariff will probably be more transparent than not, but it is impossible to know with any confidence,” Zandi said, adding that “because there is no way to find out, the appropriate answer of the Feda is to sit on his hands, keep the rates unchanged and wait for the trade war and her decline.”

This story is originally shown on Fortune.com