The Federal Reserve (FED) Kashkari: Tariffs will raise the threshold for interest rate cuts.

Golden Ten Data on April 9, the Federal Reserve’s Kashkari said that considering the impact of tariffs on inflation, even if the economy begins to deteriorate, the Federal Reserve is unlikely to cut interest rates in the face of tariffs. Mr. Kashkari said Mr. Trump’s tariffs were “much higher and much broader than expected,” and he expected them to reduce investment and economic growth and push up inflation “at least in the short term.” Kashkari writes: "As a result of tariffs, the barriers to somehow changing interest rates have increased. “Given the importance of keeping long-term inflation expectations stable and the potential for tariffs to boost near-term inflation, the bar for rate cuts is higher even amid economic weakness and a potential rise in unemployment.” He pointed to the recent rise in inflation expectations and the experience of high inflation in the U.S. for years as reasons why the Fed may not be able to ignore any tariff-driven price shocks. “Given the high inflation we’ve experienced in recent years, and the risk of long-term inflation expectations getting out of control, I think our priority must be to keep long-term inflation expectations stable,” he said.