Response from Powell: Why can't the Fed assume that the inflation caused by tariffs is a one-time impact?

When judging the impact of tariffs on inflation, the standard economic model is straightforward: it should result in a one-time price increase. However, the Federal Reserve's Bostonic said on Tuesday that the uncertainty and rapidly changing policies of the Trump administration make the situation more complex and less clear than what textbooks suggest. "The textbook concept of tariffs... is that tariffs are imposed only once, and everyone knows what it is." "This is not the environment we have been in for the past few months, so one question is, how will people react - accept a long-lasting change in tariff policy?" Bostonic said. He is primarily concerned about how this long-term, gradual tariff policy shift will affect business and consumer behavior. If businesses and households begin to expect ongoing tariff adjustments, it could lead to more prolonged inflationary pressures.