Federal Reserve (Fed) Governor Christopher Waller said on Monday that he expects the impact of the tariffs proposed by former President Donald Trump on prices to be 'temporary', using a term that previously drew criticism for the central bank during an earlier inflation period.

'I can hear the booing objections that this is surely a mistake, considering what happened in 2021 and 2022. But just because it didn't work once doesn't mean you shouldn't think that way again,' Waller said in a policy speech in St. Louis, where he compared his view on inflation to the controversial football tactic called 'tush push.'

Presenting two scenarios for what the tariffs will ultimately look like, Waller stated that if tariffs are higher and last longer, inflation could rise sharply initially to around 4% to 5%, then fall as growth slows and unemployment rises. In the lower tariff scenario, inflation could reach around 3% and then decrease.

In any scenario, the Fed will still cut interest rates — just differing in timing, he said. Higher tariffs may force the Fed to cut to support growth, while lower tariffs could pave the way for a 'happy' cut later this year, Waller added.

'Yes, I am saying that I expect high inflation to be only temporary, and 'temporary' is just another way of saying 'transitory,' he stated. 'Although the inflation that began in 2021 has lasted longer than I and other policymakers initially predicted, my best assessment is that the inflation caused by tariffs will only be temporary.'

The term 'transitory' was used by the Fed and many economists to describe the inflation wave in 2021 that they expected would ease as supply chains and consumer demand normalized after the Covid-19 pandemic.

However, prices continued to rise, reaching their highest levels since the early 1980s, forcing the Fed to continuously raise interest rates aggressively. While inflation has cooled significantly since the Fed began raising rates in 2022, it remains above the central bank's 2% target. The Fed has cut its benchmark interest rate by a total of 1 percentage point by the end of 2024, but has not cut again this year.

As a Trump appointee during his first term, Waller used a football metaphor to explain his view on 'temporary' inflation. He cited the famous 'tush push' tactic of the Philadelphia Eagles, which is often used effectively in short-distance or goal-line situations.

'You are the Philadelphia Eagles and it's fourth down, just inches from the goal line. You call the 'tush push' tactic but fail when running the ball,' he said. 'So does that mean you shouldn't use that tactic next time you find yourself in a similar situation? I don't think so.'

Waller estimates that Trump has two purposes for these tariffs: either to maintain high tariffs to restructure the economy or to use them as a negotiating tool. In the first case, he predicts growth will slow 'to almost a halt' while the unemployment rate will 'rise significantly.' If tariffs are used as a negotiating tool and are lowered, the impact on inflation will be 'significantly smaller.'

He added that one of 'the biggest shocks affecting the U.S. economy in decades' is making forecasting and policy planning difficult. Fed officials will need to 'stay flexible' in deciding the next direction.