St. Louis Fed's Musalem says tariffs could trigger more persistent inflation
Risks have increased that U.S. inflation will stall above the Federal Reserve's 2% target or even rise further in the near term, with rising import taxes potentially triggering more persistent price pressures, St. Louis Fed president Alberto Musalem said on Wednesday. Musalem said that while the initial direct effect of import taxes, also known as tariffs, could be short-lived, he was "wary" to think it would all fade away without influencing underlying inflation in a way that could force the Fed to react. If it pushes inflation expectations and prices higher in a consistent way, Musalem said, it may even require the Fed to consider tighter monetary policy down the road, though that is not his baseline outlook.