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Tariffs May Lower Inflation, Fed Cuts Rates
Published 1 week, 1 day ago
Description
New research from the San Francisco Federal Reserve Bank challenges conventional wisdom, suggesting that last years tariff hikes under the Trump administration may have lowered inflation instead of raising it. The study, based on a century and a half of data, indicates that significant tariff increases could push unemployment higher and ease price pressures, potentially warranting interest rate cuts. However, the researchers caution that historical patterns may not perfectly apply today due to the increased reliance on imported parts in U.S. manufacturing and the lack of economic uncertainty and stock market drops following the tariff shocks. As this debate unfolds, it could significantly influence how policymakers approach the economy in the future.
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