A senior U.S. Federal Reserve official, Susan Collins, stated on Friday that the Fed is “absolutely” prepared to step in and help calm financial markets, following the turbulence caused by U.S. President Donald Trump’s recent tariff policies.
Trump’s announcement on April 2 of sweeping tariffs on imports from multiple countries initially sent shockwaves through the stock and bond markets. However, last week, he temporarily rolled back many of these tariffs, reducing them to 10%, while leaving China with hefty new tariffs totaling 145%.
Collins, President of the Boston Federal Reserve, emphasized that the Fed would be ready to deploy its tools to stabilize markets if needed. She also indicated that higher tariffs could lead to slower economic growth and higher inflation, forecasting inflation would rise well above 3% this year, although she does not expect a “significant” economic downturn.
Other Fed officials, such as St. Louis Fed President Alberto Musalem, also spoke about the risks posed by high tariffs. Musalem expressed concern that the impact of high tariffs on inflation could be longer-lasting than expected.
Meanwhile, New York Fed President John Williams predicted that economic growth would slow, and unemployment could rise from its current level of 4.2% to between 4.5% and 5% over the next year. He also warned that inflation could rise to 3.5% to 4%, significantly above the Fed’s long-term target of 2%.
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