Fed officials divided over future monetary policy amid inflation risks

Debate is heating up within the US Federal Reserve (Fed) over the future direction of monetary policy. Officials are weighing whether to keep interest rates at their current level or allow for a potential cut by the end of the year. A key factor in the discussions is President Donald Trump’s tariff policy and its impact on inflation, according to Yahoo Finance.

Some policymakers, including Chicago Fed President Austan Goolsbee and Federal Reserve Governor Christopher Waller, view the tariffs' effects as temporary. They leave the door open to potential monetary easing by year-end. Waller, in particular, points to the strong labor market and stable inflation expectations, suggesting Fed officials can afford to look past a temporary hike in prices.

A more cautious stance has been taken by regional Fed presidents Neel Kashkari and Lorie Logan. They warn that trade disputes could drag on and fuel persistent consumer price growth, particularly following the planned doubling of steel and aluminum tariffs to 50%. As Logan stresses, the Federal Reserve needs to carefully evaluate medium-term projections, avoiding hasty decisions that could accelerate inflation.