MNI BRIEF: Fed's Collins Expects Tariffs To Raise Prices
MNI (WASHINGTON) - Broad-based tariffs would in theory raise prices on both final and intermediate goods as well as have suppressive effects on production and demand, Federal Reserve Bank of Boston President Susan Collins said Monday, after the Trump administration imposed a 25% tariff on most goods from Canada and Mexico and a 10% tariff on Chinese imports Saturday.
"The kind of broad-based tariffs announced over the weekend, one would expect to have an impact on prices. We have limited experience with such broad-based tariffs," she told CNBC. "There are second-round effects as well which make it particularly hard to assess what the amounts would be." The Fed would look through a one-time rise in the price level unless there are impacts on inflation expectations and other factors, she added. (See: MNI INTERVIEW: Fed Rates Likely On Hold Through 2025-Croushore)
She also reiterated her view that the U.S. economy is doing well and inflation trending down slowly, meaning there's no rush to cut interest rates again. "It's really appropriate for policy to be patient, careful. I don't see urgency for making additional adjustments, especially given all of the uncertainty, even though of course, we're still somewhat restrictive."