Inflation by Assumption: The Fed’s Tariff Shortcut
Federal Reserve Chairman Jerome Powell made headlines last week when he warned that new tariffs could push prices higher, remarking: “Everyone I know is forecasting a meaningful increase on prices from tariffs because someone has to pay for the tariffs.”
That may be true of Powell’s circle, but it’s not true of the data. And if Powell is drawing his view from the latest Federal Reserve research, he may be misled by a model that appears far more rigorous than it really is.
A new working paper from the Boston Fed claims that nearly all of the cost of the 2018–2019 tariffs on Chinese imports was passed on to consumers and that the tariffs raised core
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