Goldman Sachs economists project that Trump’s tariffs likely to send inflation higher
- Trump’s 25% impost on imports from Canada and Mexico, along with a 10% tariff on Canadian energy
- China tariffs at 20%
GS project a 0.6% increase in US core consumer prices. The latest the core consumer price index in the U.S., excluding food and energy, rose by 3.3% year-on-year. Add 0.6% and its back above 4%.
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Central banks typically overlook supply shocks like tariffs since the resulting price increases are usually temporary. This approach allows them to lower interest rates to support the economy and limit the impact on stocks. However, if businesses and consumers expect prices to keep rising, the Federal Reserve may fear that these expectations could drive further inflation, making it less inclined to cut rates.
Earlier:
- Fed’s Williams says its likely that Trump’s tariffs will drive inflation higher
- Fed’s Williams: There is a lot of uncertainty on how tariffs will play out
This article was written by Eamonn Sheridan at www.forexlive.com.
