Fed's Kugler: US inflation more affected by tariffs than economic growth

Adriana Kugler, a member of the Federal Reserve's Board of Governors, stated that President Trump's tariffs currently pose a greater risk to US inflation than to economic growth.

A rush by US consumers to purchase goods before tariffs take effect could temporarily boost economic activity in early 2025. However, such a short-term surge might be followed by serious inflationary consequences, Bloomberg reported.

Kugler stated that the Fed’s future actions will focus on supporting the nation’s economic growth while controlling inflation. Despite a rise in short-term inflation expectations, she noted that long-term forecasts remain stable. She supports keeping the central bank’s benchmark interest rate unchanged amid uncertainty surrounding Trump’s trade policies.

Fed officials are opting to remain patient with monetary policy adjustments, as the US labor market continues to show resilience, Bloomberg added. The June employment report underscored this strength, revealing robust hiring and a slight uptick in the unemployment rate to 4.2%.