Bostic responds: Why can't the Federal Reserve assume that the inflation caused by tariffs is a one-time impact?

On June 3, when judging the impact of tariffs on inflation, the standard economic model is straightforward: this should be a one-time price increase. But the Federal Reserve’s Bostic said Tuesday that the uncertainty of the Trump administration’s tariffs and fast-changing policies make the situation more complicated and less clear than the textbooks suggest. "The textbook concept of tariffs is… The tariff is levied only once, and everyone knows what it is. “It’s not the environment we’ve been in for the last few months, so there’s a question of how people are going to react – to accept a tariff policy change that will last a long time.” Bostic said his main concern is how this long-term, gradual shift in tariff policy will affect business and consumer behavior. If businesses and households start to anticipate continued tariff adjustments, it could lead to more persistent inflationary pressures.