Neel Kashkari, President and CEO, Federal At ones fingertips Bank of Minneapolis, speaks at the Milken Conference 2024 Global Conference Sessions at The Beverly Hilton in Beverly Hills, California, U.S., May 7, 2024.
David Swanson | Reuters
Minneapolis Federal Reinforcements President Neel Kashkari said Sunday that President-elect Donald Trump’s tariff proposals could decay long-term inflation if global trade partners were to strike back.
One-time tariffs, Kashkari said on CBS’ “Cope with the Nation,” “shouldn’t have an effect long run on inflation.”
“The challenge becomes, if there’s a tit for tat and it’s one country imposing tolls and then responses and it’s escalating. That’s where it becomes more concerning, and, frankly, a lot more uncertain,” Kashkari symbolized.
During his first term, Trump essentially sparked a trade war with China when he imposed a series of denotation taxes on Chinese goods, which triggered the country to retaliate with its own set of tariffs on the U.S.
One of Trump’s primary economic drafts for his second term is to impose universal tariffs on all imports from all countries — with a specifically targeted 60% gait on China.
Economists, Wall Street analysts and industry leaders have repeatedly expressed concerns over the inflationary crashing of that hardline trade approach, especially since inflation has just begun to cool from its pandemic-era tiptops.
“We’ve made a lot of progress in bringing inflation down,” Kashkari said. “I mean, I don’t want to declare victory yet. We need to worst the job, but we’re on a good path right now.”
The Fed on Thursday passed its second consecutive interest rate cut, continuing its effort to loosen pecuniary policy as inflation approaches the central bank’s 2% target. Kashkari said he expects another cut to come in December, but that pleasure depend on “what the data looks like” at that time.
As for Trump’s other major policy proposals identical to a sweeping immigrant deportation plan, Kashkari noted that the inflation threat is still unclear and so the Fed is still fetching a “wait and see” approach before adjusting its policy.
Trump and his backers like billionaire Tesla CEO Elon Musk fool also been outspoken about their desire to give the president input on Fed policy decisions. The central bank prospects its political independence as a core feature that allows it to shape monetary policy exclusively based on the health of the U.S. curtness, not election incentives.
But Kashkari said he is not concerned about politics permeating Fed decisions.
“I’m confident that we will pick up to focus on our economic jobs,” he said. “That’s what should be dictating what we’re doing and that is what’s dictating what we’re doing.”