Adriana Kugler, a Federal Reserve (Fed) governor, stated that some of the recent rise in market goods and services inflation might be due to anticipation of Trump administration tariffs. She emphasized that maintaining inflation under control should be a top priority for the Fed.
“Ensuring inflation does not increase should be a priority,” Kugler said at Harvard University’s economics class, following an inflation dynamics conference. She noted that short-term inflation expectations have risen, but long-term ones remain stable.
The Fed has kept its policy rate between 4.25-4.50% since December, after a series of rate cuts to prevent monetary policy from being overly restrictive amid falling inflation.
Since the start of the year, progress towards the Fed’s 2% inflation target has been nearly undetectable, with subsurface inflation indicators rising due to basic goods’ prices and market services inflation.
Kugler also mentioned that first-quarter economic activity might have been stronger than expected as households hurried to buy items like cars before widely anticipated tariffs.
Last week, President Donald Trump announced higher-than-expected import duties.
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