US Fed officials warned that "Trump tariffs" will drive up inflation, and the question is how long it will last!

Two US Fed officials stated on Tuesday that prices are set to rise amid rising US import tariffs. The question now is whether the inflationary shock will be short-lived or persist for a longer period.

That same day,Raphael Bostic, President of the Federal Reserve Bank of Atlanta,said on the sidelines of a conference in Florida: "One thing we've heard is that, so far, a lot of the tariff impacts haven't actually shown up in the data yet. There's been a lot of front-running, inventory building, and the like. And we're hearing from more and more businesses that these strategies... have started to lose their effectiveness."

"If these 'front-loading strategies' lose their effectiveness, we'll see some changes in prices, and then we'll see how consumers respond to that," he added.

Bostic now expects that the US Fed will have to wait longer to clarify the economic direction and make any adjustments to interest rates. He predicts thatthe US Fed will only cut interest rates by 0.25 percentage point this year and will wait on the sidelines for a few months (three to six months) to see how the effects of the Trump administration's policies become clearer.

"We should wait to see where the economy is going before taking any decisive actions," he said.

Coincidentally,Alberto Musalem, President of the Federal Reserve Bank of St. Louis,also mentioned the impact of tariffs that same day. He pointed out that the US Fed first needs to guard against rising inflation expectations, andthe key to this effort will be assessing whether future price increases are one-time events or have the potential to evolve into more persistent increases.

Musalem said that while tariff plans may have been scaled back, they "still seem likely to have a significant impact on the near-term economic outlook," having "a direct, one-time impact on the prices of imported final goods, an indirect impact on the prices of domestically produced goods and services, and potentially a second-round impact on inflation."

He added thatprematurely concluding that inflationary impacts will fade on their own "could risk underestimating the level and persistence of inflation" and trigger more inflationary problems in the future.

At the same time, Musalem emphasized that the high degree of uncertainty surrounding the Trump administration's trade and other policies could lead to a significant economic slowdown, as households and businesses pause spending and investment decisions while waiting for clearer information.

"If the economy needs to continue making capital expenditures, needs to continue hiring, and all these decisions are paused due to uncertainty, then that will affect the economic outlook I'm anticipating.""I don't want to give a precise numerical estimate, but I think it tends to have a fairly significant impact," he added.

However, so far, the main impact seems to have emerged in confidence surveys. These surveys indicate that households and businesses have less confidence in the economic outlook and anticipate higher inflation.

In addition, Stephen Miran, the chair of the White House Council of Economic Advisers, dismissed on Tuesday the notion that the tariffs imposed by the Trump administration to date, as well as those that may be increased in the coming weeks, would lead to meaningful inflation.

"We've been imposing tariffs since the first day of this administration, but there hasn't been a truly meaningful impact on inflation. The recent Consumer Price Index (CPI) report was weaker than expected," he said.