Trump's Tariffs Trigger Inflation Surge: A Fed Perspective
The Federal Reserve's favored inflation indicator rose in June due to President Donald Trump's tariffs, affecting prices for many goods. The Fed kept interest rates unchanged despite inflation exceeding its 2% goal. Import prices for goods like appliances rose, while service costs like airfares fell dramatically.
- Country:
- United States
The Federal Reserve's preferred inflation metric experienced an uptick last month, signaling the impact of President Donald Trump's tariffs on goods prices.
According to the Commerce Department, prices increased by 2.6% in June compared to the same period last year, surpassing May's 2.4% rise. Excluding volatile food and energy costs, inflation reached 2.8% annually, aligning with the previous month's revised figures, and exceeding the Fed's 2% target.
This inflationary trend prompted caution at the Federal Reserve, which resisted Trump's calls to lower interest rates,, leaving it steady at 4.3%. Fed Chair Powell indicated a careful assessment of whether tariffs would cause a temporary or persistent inflation rise. Meanwhile, consumer spending showed cautious growth, highlighting Americans' reserved economic behavior.
(With inputs from agencies.)
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