Fed Vice Chair expects US economy to slow and inflation to rise

US Federal Reserve (Fed) Vice Chair Philip Jefferson expects import tariffs and associated uncertainty to slow economic growth and boost inflation in the country this year. However, monetary policy is currently well positioned to respond, says the official. 

According to Jefferson, imposition of import duties could interrupt the progress of inflation approaching the 2% target and push prices up at least temporarily.

The Fed Vice Chair also forecasts a slowdown in the US GDP recovery. Yet, according to Jefferson, the economy will continue to expand.

Currently, the US central bank rates are moderately restrictive, the official notes. The Fed refrains from lowering borrowing costs until the impact of Donald Trump’s tariffs on the economy becomes clearer. 

Jefferson says the outcome of various government policy changes, including trade and immigration measures, will remain uncertain for some time. The official intends to monitor the situation closely.