Fed's Kashkari: Tariff negotiations may take months or years, supports keeping policy unchanged

Planet Daily News: Minneapolis Federal Reserve Chairman Kashkari once again emphasized the necessity of maintaining caution under trade conflict uncertainty, and pointed out that defending inflation expectations is "crucial". On Tuesday, at a Bank of Japan event in Tokyo, he stated that there is a "beneficial debate" among policymakers - whether the inflationary impact of President Trump's tariffs should be viewed as a temporary shock or a long-term condition. Kashkari noted in his speech that tariff negotiations may take months or years to fully conclude, taxes on intermediate goods take time to transmit, and the risk of inflation expectations becoming unanchored may increase over time. He stated: "I will prioritize defending long-term inflation expectations." The Federal Reserve has maintained interest rates unchanged in its three meetings so far this year and is expected to do the same at its next meeting in June. Prior to this, the Federal Reserve cut rates by one percentage point in the last three months of last year. Economists generally expect tariffs to cause inflation, but its prevalence depends on the scale of tariffs and the degree of retaliation by other countries. Tariffs may drag down economic growth and lead to layoffs, which could result in "stagflation", putting the Federal Reserve in a dilemma: whether to maintain high interest rates to curb inflation or cut rates to support a sluggish economy. (Jinshi)