Fed’s Williams says its likely that Trump’s tariffs will drive inflation higher

March 04, 2025 at 09:27PM
Federal Reserve Bank of New York President John Williams spoke on Tuesday, ICYMI headlines here:

Fed’s Williams: There is a lot of uncertainty on how tariffs will play out

As befits a central banker Williams was cautious, saying there is a lot of uncertainty about how the ec onomy will respond to Trump’s tariffs. Williams does expect higher inflation from Trump’s tariffs though:

“Based on what we know today, given all the uncertainties around that, I do factor in some effects of tariffs now on inflation, on prices, because I think we will see some of those effects later this year,”

Also:

You also “have to factor in how does that affect economic activity — decisions by businesses to invest, consumers to spend?”

“And that’s where I think another big uncertainty is.”

I pointed out on Monday that the uncertainty on Trump’s policy is going to have a negative impact on business:

Its easy as traders to get divorced from the economy.

… trading and running a business out there on main street can be quite different. If I think I’ve made a bad decision I can click a button and be out of a trade in a blink of an eye. I can jump into the next trade just as quick. Easy-peasy. But what if I’ve invested a couple of million in capital expenditure on a new piece of equipment? There’s no quick exit button for that. Folks running a main street business have to think long and hard about expenditures, risk, employing people … and sometimes its easier, and indeed advisable, to just sit it out until the chaos is over.

More here:

US “economy appears to be gagging” on haphazard economic policymaking in DC

As head of the NY Fed Williams has a permanent vote on the Bank’s Federal Open Market Committee (FOMC). Indeed, he is vice-chair of the Committee (Powell is Chair of the Committee).

This article was written by Eamonn Sheridan at www.forexlive.com.