Americans may see inflation ticks in 2025, as the Chairman of Federal Reserve Bank of Cleveland and CEO Beth Hamac, consumers start passing business at the cost of tariffs of Trump administration, told CBS News’ Kelly O’Gardi in an interview.
So far this year, inflation has been relatively silent despite President Trump’s widespread tariff, partly because Many businesses stock goods and manufacturing parts Beyond the implementation of import duties. Some businesses facing high tariffs also chose to increase the cost increase on consumers as they were waiting for more clarity around the tariff rates being organized. Additionally, the Trump administration established several stagnation on danger levy, delaying cost increase for businesses and consumers.
Mr. Trump is pushing the fed to cut interest rates, which cite the number of inflation and cut from other major central banks, such as in the UK and the European Union. But the Federal Reserve maintained its benchmark rate last week at the same level where it has been parked since December 2024, Fed Chairman Jerome Powell cited the risks of high inflation due to the tariff of Trump administration.
This danger is also exposed by Hamac, who said that inflation may reach 3% annual rate this year, represents a speed that will be 1 percent higher than the target of 2% annual rate of the Fed.
“Personal businesses are trying to hold back to them back to them [tariff] Cost, because they are concerned about what it could mean for demand, “Hamac told O’gardie.” They are selling inventory that they had gathered at the beginning of the year, and so they did not need to charge for tariffs, but they are coming through those stockpiles. ,
He said, “They are coming to the point where their margin is being squeezed and they have to start passing consumers.”
Many houses are still struggling with the cost of living, half the Americans said that they see grocery prices as a major source of stress in their lives, removing housing costs and health care, according to A. new poll From Associated Press-NORC Center for Public Affairs Research.
“Two-speed economy”
Hamc said that the US appears to be in the “two-motion economy”.
“The top part of the income spectrum is doing incredibly good,” he said. “They are feeling very excited about the stock market, how their 401 (K) S are doing, and they are feeling flush with cash.”
However, he said, a lot of economic challenges are facing a lot of economic challenges in low -income houses.
“I hear that individuals trading, they go to supermarkets and they cannot buy ground beef,” Hamac said. “They are buying hot dogs, they are looking at their $ 400 emergency funds, and it was not able to pay for a new air conditioner or car repair, for which he was able to pay.”
He said that the tariff of Trump administration can lead to an increase in price pressure costs as businesses adjust their prices to cover import duties. Fed officials focus on ensuring that the price increase does not become what it calls “more frequent inflation problems”.
“I am focusing on what I am focusing on is making sure that we have an economy working for all Americans,” Hamac said. “This is why I believe that we really need to focus on the inflation side of our mandate.”
At the same time, Friday Disappointing jobs report This shows that the labor market is also facing new challenges, employers hire less than expected workers in July. The Fed is to keep both inflation and unemployment low, the central bank has moved to an increase in interest rate to cool or rate inflation to help in the job market.
With inflation on growth and some headwinds in the job market, the Fed has a delicate balance act, he said.
Hamac said, “This is a really challenging time for monetary policy makers, as both sides of our mandate are being challenged.” “And so what path to go on and how quickly to move forward, a very difficult.
The Federal Reserve will take its next decision on interest rates in September, and some analysts are already calling for a rate cut with the US economy, given the development of three months of weak jobs. Hamac admitted that the rates have to wait a long time to cut rates due to potential inflation.
“If we wait too long to cut rates, it may mean that more people are losing their jobs as we want to see,” Hamac said. “We have to balance those two factors when we are trying to decide what is right to push the economy.
