Fed Chair Jerome Powell signaled he’s watching the near-term developments on tariffs very closely, as the Fed expects to see more tariff effects filter through to consumer prices throughout the summer.
The next major tariff policy deadline is July 9, when the steeper “Liberation Day” tariffs are expected to resume if deals are not reached or if the Trump administration decides not to extend the pause. The next report on core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation measure, is scheduled to be released on June 27.
It remains to be seen when and how tariff costs are distributed.
“The pass-through of tariffs to consumer price inflation is a whole process that’s very uncertain,” Powell explained. “There are many parties in that chain — there’s the manufacturer, the exporter, the importer, the retailer, and the consumer, and each one of those is going to be trying not to be the one to pay for the tariff. But together they will all pay for the tariff, or maybe one party will pay it all.”
“But that process is very hard to predict, and we haven’t been through a situation like this,” he added. “We’d like to get some more data.”
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