Federal Reserve Kashkari: Tariffs will raise threshold for interest rate cuts

According to Golden Finance, the Federal Reserve's Kashkari stated that considering the impact of tariffs on inflation, even if the economy begins to deteriorate, the Fed is unlikely to cut interest rates in the face of tariffs. Kashkari said that Trump's tariffs are "much higher and wider than expected," and he expects these tariffs to lower investment and economic growth, and "at least in the short term," push up inflation. Kashkari wrote, "The obstacles to changing interest rates in some way have increased due to tariffs." "Given the importance of maintaining stable long-term inflation expectations and the possibility that tariffs may boost recent inflation, even in the face of economic weakness and rising unemployment, the threshold for interest rate cuts has become higher." He pointed out that recent indicators of inflation expectations have begun to rise, as well as years of high inflation in the United States, which are reasons why the Federal Reserve may not be able to ignore any tariff driven price shocks. Given the high inflation we have experienced in recent years and the risk of long-term inflation expectations spiraling out of control, I believe our top priority must be to maintain stable long-term inflation expectations, "he said.