Fed Official Highlights Risks of Increased Tariffs

Dallas Federal Reserve President Lorie Logan delivered a stark warning at the Peterson Institute for International Economics, suggesting that higher tariffs could lead to both increased unemployment and inflation. "The stance of monetary policy is well positioned for now," Logan remarked, but cautioned about the potential for tariffs to disrupt this balance.

Understanding the Inflationary Impact

Logan emphasized the importance of preventing tariff-related price hikes from fueling persistent inflation. "The effect on inflation depends on cost pass-through speed and the stability of long-term inflation expectations," she explained. The Fed official warned that entrenched inflation expectations could complicate reduction efforts, worsen employment conditions, and amplify economic damage.