Customs duty increases | Fed official does not imagine “significant” effect on inflation

(Washington) A Fed official does not imagine that tariff increases, like those promised by Donald Trump, will have “a significant and lasting effect” on the level of inflation, he said Wednesday before the OECD.

“The proposals relating to customs duties suggest a possible new source of upward pressure on inflation in the coming year,” noted one of the governors of the American central bank (Fed), Christopher Waller, according to the text of a speech given at the organization’s headquarters in Paris, which AFP was able to consult.

Donald Trump, who takes office on January 20, has threatened to impose harsh tariffs on the United States’ trading partners, including Canada, Mexico and China, which could impact the economy.

Such a decision would notably revive inflation in the United States, many experts assure, which Donald Trump refutes.

Mr. Waller also stressed that he was in favor of continuing the Fed’s cycle of interest rate cuts.

The Fed has systematically lowered its rates during its last three meetings, for a total of one percentage point, while inflation has fallen sharply compared to its highest level reached in June 2022, then at 9.5%. on an annual basis.

But while the American economy remains very solid, inflation has still not returned to the 2% target imposed by the Fed’s mandate and even seemed to reaccelerate slightly at the end of the year.

“I think inflation will continue to move towards our 2% target in the medium term and that declines [de taux] additional information will be appropriate,” said Christopher Waller.

The president of the institution, Jerome Powell, suggested during the last meeting that the Fed will only make two additional rate cuts in 2025, an opinion echoed by analysts, who expect a pause during the next meeting, at the end of January, and two declines over the year, according to the CME FedWatch monitoring tool.