The new economic forecast released by the Federal Reserve this week predicts a slowdown in economic growth and an increase in inflation.
However, policymakers still expect to cut interest rates later this year — indicating that they do believe tariffs will push prices up, but not persistently.
That said, there is significant disagreement: among the 19 officials, seven decision-makers believe there is no need to cut rates this year, while eight expect two rate cuts, which aligns with investors' views on the Fed cutting rates by 25 basis points at the September and December meetings.
Additionally, two expect one rate cut, and two expect three rate cuts.
Federal Reserve Governor Waller and Federal Reserve Barkin expressed their views on interest rates after the resolution, with Waller suggesting a cut as early as July, while Barkin believes there is no rush to cut rates.
Although Waller and Barkin did not specify their exact views on interest rates, their comments represent two extremes regarding the extent to which Trump's tariffs will impact prices, employment, and economic growth in the coming months.
