Federal Reserve System Executive: Trump's Tariff Policy May Lead to Sustained High Inflation in the U.S.
Xinhua News Agency, Beijing, June 7 - Alberto Musalem, President of the Federal Reserve Bank of St. Louis, recently stated in an interview with the UK Financial Times that U.S. President Donald Trump's tariff policy may cause the U.S. inflation rate to remain persistently high. He warned that U.S. policymakers will face economic uncertainty until the end of this summer.
The Financial Times published the interview on June 6. Musalem indicated that Trump's tariff policy could raise U.S. inflation rates in 'one to two quarters,' and 'another possible scenario is that the tariff's impact on prices will last longer.'
Reuters pointed out that the Trump administration's actions to raise tariffs and introduce a $2.4 trillion federal budget proposal have already caused market turbulence, prompting the Federal Reserve to remain on hold and adopt a wait-and-see approach since it cut interest rates last year.
The functions of the Federal Reserve System are equivalent to those of the central bank of the United States, with its main decision-making body being the Federal Reserve Board located in the capital, Washington, and 12 Federal Reserve Banks that oversee different Federal Reserve districts, including the Federal Reserve Bank of St. Louis located in Missouri. Musalem has served as the bank's president and CEO since April 2 of last year, having previously held an executive position at the Federal Reserve Bank of New York.
Musalem stated that if the uncertainty surrounding U.S. trade and fiscal policy can 'dissipate in July,' the Federal Reserve may prepare to cut interest rates in September.
The Federal Reserve is scheduled to hold a monetary policy meeting in mid-June, during which it is expected to release the latest economic forecast data for the U.S., but based on its recent statements, the benchmark interest rate is likely to remain unchanged. Since Trump took office in January, he has repeatedly pressured and urged the Federal Reserve to cut interest rates, and at one point even threatened to fire Federal Reserve Chairman Jerome Powell, raising market concerns about government intervention in the Fed's 'independent' decision-making power. (Shen Min)