Minneapolis Fed President Neel Kashkari warned that even modest U.S. tariffs could significantly disrupt trade, particularly for farmers. “In many sectors, whether it’s a 10% tariff or 50% or 100% tariff, it has a dramatic effect on the trade flows and so a lot of my folks that I hear from here are quite concerned,” he said on CBS’s Face the Nation.
Kashkari added that long-term interest rates will be shaped by U.S. trade and fiscal policy, and reiterated the Fed’s focus on keeping inflation under control: “At the Fed, our job is to keep inflation under control so that rate isn’t even higher.”
While supporting a hold on interest rates, Kashkari noted the Fed won’t rush to cut rates in response to tariff-related uncertainty, especially if inflation stays elevated. He acknowledged investor concerns about shifting U.S. policies: “Investors in the U.S. and around the world are trying to determine what is the new normal in America.”
Despite recent volatility, Kashkari said markets remain orderly: “Markets are functioning, trades are happening and so I anticipate that’s going to continue.”
This article was written by Eamonn Sheridan at www.forexlive.com.