US Federal Reserve Warns of Price Hikes Due to Trump’s Tariffs

According to minutes from the January meeting of the Federal Reserve, released this week, American shoppers could be in for higher prices if President Donald Trump implements some of his proposed tariffs.

The Feds committee members expressed concern that these policies might hinder the process of disinflation. They indicated that business contacts had informed them that companies would pass on to consumers any increased input costs resulting from potential tariffs.

These comments come amid criticism directed at the Fed by Trump for not lowering interest rates sooner following their decision in January to keep rates unchanged. The minutes also highlighted elevated uncertainty regarding possible changes to trade, immigration, fiscal, and regulatory policies.

Fed chair Jerome Powell has previously stated that the bank is not “in a hurry” to cut more due to significant economic-policy uncertainties. Analysts predict that there will likely be only one interest rate cut in 2025 or none at all.

Trumps campaign promises included calls for lower interest rates, which would benefit borrowers and potentially boost the economy. However, it has sparked debate about whether he respects the tradition of Fed independence meant to protect its focus on long-term US economic health from political interference.

Powell previously told reporters that he had no contact with Trump and that rate-setting decisions were based on data analysis. Nevertheless, questions have been raised about how the Fed will handle a new White House order canceling diversity programs and why it withdrew from a global central bank group focused on climate risks to finance systems.

The challenges Powell faces in maintaining Fed independence highlight the ongoing tensions between economic policy and political influence under Trumps administration.