Fed's Musallem: Fed should be wary of continued inflation driven by tariffs

Odaily Planet Daily News: Fed's Musallem said he is closely watching whether rising short-term inflation expectations will penetrate into long-term expectations, which could make it more difficult to fight inflation and reduce the Fed's flexibility to deal with a weak labor market. He pointed out that there is a high degree of uncertainty about the effects and timing of tariffs and other new policies, and there is a "clear possibility" that inflation will re-accelerate even if the job market weakens. He said that the Fed's policy is in a favorable position and should remain vigilant. "I am cautious about the assumption that the impact of increased tariffs on inflation is only temporary or limited," he said. "I think it is appropriate to "fend off" second-round effects through monetary policy, although in reality it may be a challenge to distinguish between potential inflation and the direct, indirect and second-round effects of tariffs." (Jinshi)