Fed’s Paulson: tariffs not causing widespread inflation

Investing.com -- Federal Reserve Bank of Philadelphia President Anna Paulson stated Friday that while tariffs can increase some input costs, they are not leading to widespread inflation.

Speaking at an event in Wilmington, Delaware, Paulson explained that according to standard economic analysis, tariffs typically lower growth slightly and raise prices, but not in a sustained way that feeds on itself.

"It’s a change to the cost of inputs that eventually shows up in prices, but it’s not something that has to trigger widespread inflation, and that’s not what I see happening right now," Paulson said.

Paulson emphasized that 2% remains the right goal for inflation, noting that the key factor is not just the level but achieving price stability. She expressed confidence that both the public and markets believe the Fed will reach its 2% target.

"It is really, really important that we bring inflation all the way back to 2%," Paulson stressed.

The Philadelphia Fed president also commented on economic data, describing current economic information as "stale." She added that if significant changes in economic conditions were occurring, she would expect to hear about them from her contacts.

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