Federal Open Market Committee members remain somewhat split on the long-term effects of the Trump administration’s tariff policy on inflation, according to the minutes from the FOMC’s June 17-18 meeting.
During the meeting, the FOMC voted to hold the target range for the federal funds rate at 4.25%-4.5%. While the vote was unanimous, the minutes show committee participants wrestled with how to gauge the economic effects of tariffs and how that should shape monetary policy moving forward.
“While a few participants noted that tariffs would lead to a one-time increase in prices and would not affect longer-term inflation expectations, most participants noted the risk that tariffs could have more persistent effects on inflation, and some highlighted the fact that such persistence could also affect inflation expectations,” according to the minutes. “Some participants observed that because inflation has been elevated for some time, there was a heightened risk of longer-term inflation expectations becoming unanchored if there is a long-lasting rise in inflation.”
