Fed official raises concerns about inflation risks tied to President-elect Donald Trump’s return to office
(MENAFN) A senior official from the US federal Reserve, Tom Barkin, has raised concerns about inflation risks tied to President-elect Donald Trump’s return to office. Speaking to business leaders on Friday, Barkin noted that while the US Economy could experience strong growth, there could also be significant inflationary pressures, particularly if employment and wages continue to rise.
Barkin highlighted positive economic indicators, such as robust consumer spending, low job losses, and steady wage growth. However, he cautioned that rising prices are starting to challenge consumers, suggesting that inflation could reach a tipping point. “How economic policy uncertainty resolves will matter,” Barkin said, forecasting more potential for growth but emphasizing inflation risks.
While Trump has pledged to lower inflation, his policies on tariffs and immigration are creating concerns among economists. In November, Trump proposed imposing a 25% tariff on goods imported from Mexico and Canada, which could counteract his goal of reducing price growth. The US is heavily reliant on imports from Mexico, China, and Canada, and analysts worry that these tariffs could drive up costs for both businesses and consumers.
Barkin acknowledged that the Fed has adjusted its policy outlook in response to Trump’s plans, with Fed Chair Jerome Powell indicating that officials are considering the potential economic impacts of Trump’s policies. Last month, the central bank lowered its interest rate target and reduced expectations for rate cuts in 2025, signaling caution regarding inflation.
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