Two candidates for key positions at the Federal Reserve System expressed the view that current tariffs do not contribute to inflation growth, contrary to popular opinion among economists.
Miran Rejects Tariff-Inflation Link
Steven Miran, current chair of the Council of Economic Advisers, stated that "there is no evidence whatsoever of tariff-induced inflation," noting that predictions of lasting price spikes have not materialized. His comments followed the release of July's consumer price index, which showed a year-on-year price rise of 2.7%, above the Fed's official target of 2%.
Bullard Expects Rate Cuts
James Bullard, former president of the St. Louis Fed, predicted that the Fed's rate-setting Federal Open Market Committee will begin cutting rates in September. He suggested that the committee is likely to reduce the benchmark rate by a full percentage point over the next 12 months, which he believes will bring policy "close to" neutral.
Fed Independence Under Political Pressure
Both candidates addressed the issue of Fed independence, which has been tested during Trump's presidency. Miran stressed that the central bank should operate independently of political pressure, while Bullard noted that Trump is entitled to his views, highlighting the importance of working free from external influence.
Miran and Bullard's statements illuminate the ongoing debates surrounding the economy and inflation in the context of tariffs. Their opinions may significantly impact the future decisions of the Fed and the state of financial markets.
