Thomas Barkin, President of the Richmond Fed, discussed economic uncertainty related to inflation and potential tariffs, speaking on March 27, 2025, at Washington and Lee University.
Tariff Impact on Inflation
Barkin noted that tariffs, which modestly rose in 2018, may increase significantly in 2025, heavily impacting inflation. Potential tariff increases on China and other countries could significantly affect prices.
Interest Rate Uncertainty
Barkin emphasized caution in cutting interest rates, highlighting the importance of confidence in inflation control. Persistent high inflation and global economic factors add complexity to US monetary policy.
Market Reaction and Economic Outlook
Market responses were mixed: some optimistic about growth prospects, others wary of inflationary risks. Barkin stated that businesses are likely to pass increased costs to consumers if inflation persists.
The economic situation requires vigilance. Barkin conveyed that the Richmond Fed is well-positioned but must continually reassess as situations evolve.
