New York Fed's Williams Sees Tariff Impact on Inflation
- Williams estimates tariffs will increase inflation by 1-1.5%.
- This impacts macro assets and crypto indirectly.
- Policy stance remains restrictive with unchanged fed rates.
Federal Reserve Bank of New York President John Williams announced tariffs could increase U.S. inflation by 1.0% to 1.5% through mid-next year.
The inflation rise may impact financial markets, including cryptocurrencies, as it influences Federal Reserve monetary policy and macroeconomic liquidity conditions.
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Federal Reserve Bank of New York President John Williams stated that tariffs are set to increase U.S. inflation by 1.0% to 1.5% this year. This forecast comes amid ongoing evaluation of U.S. economic pressures. Williams, a leading figure in U.S. monetary policy, announced these tariffs would primarily affect inflation through the first half of next year. He emphasized that exact consequences remain uncertain, citing earlier assumptions had been overstated.
“All in all, I expect tariffs will boost overall prices by a total of between 1 and 1-1/2 percent, with these effects continuing through the first half of next year. That’s my current estimate, but there is a great deal of uncertainty about these effects.” – John Williams, President, New York Fed, New York Fed Speech
The expected change in inflation could influence several sectors, altering the dynamics of major macro assets including Treasuries, USD, and cryptocurrencies like BTC and ETH. Such economic shifts affect market risk perception. Williams indicated the federal funds rate is holding between 4.25% to 4.5%, a level described as “modestly restrictive.” Any deviation due to inflation fluctuations might significantly impact financial markets and related liquidity.
John Williams pointed out that many manufacturers and service firms are already incorporating tariff costs into their pricing strategies. Historical precedents such as the 2018–2019 tariffs have shown similar intermediate economic impacts, though long-term inflation effects were limited. Future market outcomes depend on how inflation surprises influence Federal Reserve policies. Persistently high inflation could mean prolonged restrictive policies, affecting non-yielding risk assets like Bitcoin, unless a dovish market shift occurs.
