Former Federal Reserve Chairman: Trump's policies may have only a limited impact on inflation.

Former U.S. Federal Reserve Chairman Ben Bernanke stated during the American Economic Association over the weekend that the new tariff policies that elected President Donald Trump plans to implement may not necessarily lead to a significant shift in inflation dynamics. Bernanke argued:

• I agree that Trump’s policies, whatever their merits on the public finance front, may be modest in terms of their effect on the inflation rate.
• Except for some unusual issues - including geopolitical risks - it doesn’t seem that Trump’s new tariff policies will fundamentally change the course of inflation.
• The tax cuts Trump wants to pursue are largely already in place.
• The main issue remains tariffs, where it is uncertain whether Trump will use them for trade bargaining or wants to keep them in place permanently.
• I see that tariffs on imports would reduce U.S. GDP and raise inflation, which would thereby put the Federal Reserve in a more difficult position to respond.