Fed's Kugler says tariffs could touch off more prolonged inflation

"There may be reasons why tariffs have more prolonged effects" than simply causing a one-time jump in the price of imported goods, Kugler said.
New tariffs already imposed by President
"This will affect all sectors through supply chain networks...It may take longer for that to filter through the economy," Kugler said at an event at
The risk of retaliation by other countries and the possible shift in U.S. inflation expectations could add to the impact, she said, as could the risk that tariffs distort prices so much it shifts capital towards the production of goods "in which maybe we don't have a comparative advantage."
"That will mean we're paying higher prices for things that could have been produced more cheaply somewhere else," Kugler said.
Kugler spoke as Trump was rolling out a sweeping set of new levies across much of the world, with new taxes as high as 46% on some countries, historic allies like the
Trump's actions have raised concern among some Fed officials that coming months could see growth slow even as prices rise, a difficult dilemma for a central bank charged with keeping prices stable and employment high.
"We are already seeing some upside risks to inflation...We may be seeing down the road a little bit of a slowdown as well," Kugler said.
Right now she said she felt higher-than-anticipated inflation was the bigger risk, particularly given that consumers seemed to be frontrunning tariffs with auto purchases, for example, that may add to growth in the near term.
She said in remarks prepared for the event that she supported keeping the Fed's current interest rate steady "for as long as these upside risks to inflation continue," given ongoing economic growth and stable employment.
The Fed held interest rates steady at its
(Reporting by
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