Fed’s Musalem Says Tariff Inflation Bump Likely Short-Lived

Federal Reserve official Musalem said Friday that U.S. companies are responding to the 145% tariff on Chinese imports mainly by cutting costs and renegotiating with suppliers rather than laying off workers. Firms that rely heavily on imported inputs are passing some of the higher costs to customers, while businesses closer to end consumers have largely held prices steady, he noted. Musalem added that the tariff-driven lift to inflation is "most likely" to be short-lived, although he sees a reasonable chance of some persistence in price pressures. If inflation proves stickier than expected, the Fed could struggle to meet both its price-stability and full-employment goals, he warned.