Fed’s Kashkari says more clarity needed on tariffs’ impact on inflation

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(Reuters) -Recent U.S. inflation data has been “quite positive” but some of the inflationary effect of tariffs may just be delayed, Minneapolis Federal Reserve Bank President Neel Kashkari said on Thursday. 

“We’ve been basically saying, Hey, we need to go slow until we have more clarity on what’s happening with tariff-related inflation,'” Kashkari said, of how the Fed is looking at interest rate decisions.

Businesses are going to pass on as much of the higher costs from tariffs as they can, he told the Montana Chamber of Commerce in Helena, Montana.

“We’ve also heard a lot of businesses saying, Hey, we don’t want to pass on cost increases yet because if the tariffs come back down to something more normal, why would we want to anger our customers if it’s going to be a temporary thing?” Kashkari said.

It’s also remarkable, he said, how products often “find their way around and through barriers,” a suggestion that he is watching to see if businesses find ways to avoid the biggest tariffs, which could limit the total impact on inflation.

At the moment there’s a lot of uncertainty and trade negotiations are under way, he said.

“We still need to get a better assessment of what impact tariffs are going to have on the economy,” he said. “We just don’t know yet.”

(Reporting by Ann Saphir; Editing by Sandra Maler and Leslie Adler)