"Fed megaphone": Fed officials warn of "more persistent" inflation risk from tariffs

Fed officials highlighted the risk of more persistent inflationary pressures from tariffs when they agreed to keep interest rates on hold at last month's meeting, Nick Timiraos said. "Most participants noted that the likelihood of an inflationary impact from a variety of factors was more persistent than they anticipated," the meeting notes said. Officials at last month's meeting thought their rate setting was "well positioned" to deal with latent risks, according to the meeting notes. The Fed could cut interest rates if labor market conditions worsen and hold them on hold if inflation worsens, the meeting notes said. But several policymakers noted that they could "face difficult trade-offs" if inflation proves more persistent and growth and employment prospects weaken.