Fed meeting notes: Most participants think tariffs could have more lasting impact on inflation

On July 10, participants noted that long-term inflation expectations are stable and it is important to maintain them, according to the latest Federal Reserve June meeting notes. Several participants commented that short-term inflation expectations have risen, and that such developments have the potential to spill over into long-term expectations or affect price and wage setting in the short term. While a few participants noted that tariffs would result in a one-off increase in prices that would not affect long-term inflation expectations, most noted that tariffs could have a more lasting impact on inflation, and some emphasized that such a sustained impact could also affect inflation expectations. Some participants noted that since inflation has been rising for some time, the risk of runaway long-term inflation expectations increases if inflation continues to rise.