Bloomberg Talks John Williams Talks Tariffs and Higher Prices
Mar 4, 2025
John Williams, President of the Federal Reserve Bank of New York, shares his expert insights on the intricate relationship between tariffs and inflation. He discusses how recent tariffs are likely to push prices higher, while emphasizing the uncertainty around the economy's behavior in response. Williams advises business leaders on navigating these challenges amid low unemployment and the necessity for adaptive monetary policies. He also highlights the crucial role of central bank independence in maintaining economic stability and managing inflation.
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Tariff Impacts
- Tariffs on consumer goods significantly affect import prices and consumer costs relatively quickly.
- Tariffs on intermediate goods have a more gradual impact, potentially lasting longer.
Responding to Tariffs
- The Federal Reserve has two main options when dealing with tariffs.
- It can raise interest rates to combat inflation, risking a recession, or ignore the tariffs, assuming a one-time price increase.
CEO Uncertainty
- Business leaders are preparing for various economic scenarios due to policy uncertainties.
- Many advise caution in major business decisions until more information is available.