Press conference exchange between CHRIS RUGABER and Fed Chair Jerome Powell:

user: Thank you. Chris Rugaber at Associated Press. Thanks for taking the question. In September 2018, the Fed staff in the Tealbook discussed a policy of “looking through” any new tariffs as long as they were one-time increases and inflation expectations remained anchored. Could you comment on if that analysis remains effective and any other thinking on tariffs generally that you can share?

assistant: So I do think that the 2018, the September 2018 Tealbook alternative simulations are a good place to start. I happened to have brought them here with me today. I’m sure you have them too. They’re, they’re a good starting point, and, and I would just say, you know, it’s six-years-old analysis. But nonetheless, this is still, I think, I think the right, the right questions to ask. And, you know, there, there were two simulations: one was—one was “seeing through,” one was not. And I point you to, you’ll— there’s some language in the—in the “see- through” paragraph. It says, you know, it considers situations in which it might be appropriate to “see through” inflation and then, and then names some conditions that in, in which it might not be. In any case, this is not a question that’s in front of us right now. We, we won’t face that question—we don’t know when we’ll face that question. What the Committee’s doing now is, is discussing pathways and understanding, again, the ways in which tariff-driven inflation can affect—tariffs can affect inflation and the economy, and, and how to think about that. So, we’re, we’re—we’ve done a bit of, good bit of work, all of us have, each of us has, and, you know, it puts us in position, when we finally do see what the, what the actual policies are, to be, to make, you know, a more, more careful, thoughtful assessment of what might be the appropriate policy response.

user: Great, and just a quick follow-up. Do you, given the recent bout of inflation that we’ve been through, with consumers seeing how, you know, prices can rise and businesses being—seeing that they can raise prices, at least for some time, does that make it a little bit riskier to look through tariffs? I mean, are—do you feel that you have to respond more quickly to inflation threats, given what we’ve seen the past few years?

assistant: So the, the main thing is—and this is also a point in these alternative simulations—is that there’re just many, many factors that go into what, what—how much tariffs will, will even go into consumer inflation. How persistent will that be? And, you know, so, we just—we just don’t know, really, very much at all about the actual policies, so it’s very premature to try to make any conclusion. We don’t know what’ll be tariffed, from what countries, for how long, and what size. We don’t know whether there’ll be, you know, retaliatory tariffs. We don’t know what the, you know, the transmission of any of that will be into consumer prices. To your—to your point as well, I don’t—I wouldn’t say that we know whether the last episode is or is not a good model for what happened. You pointed out we’ve just been through a period of high inflation. We’ve just gotten through that period. That’s a difference. It was also quite a bit of diversion of trade away from China to other countries, since that, that may—that may have affects. I don’t know. I just think we, we need to take our time, not rush, and make a very careful assessment, but only when we’ve actually seen what the policies are and how they’re implemented. And, you know, we’re just—we’re just not at that stage. We’re at the stage of doing what other forecasters are doing—which is thinking about these questions, but not, not trying to get to definitive answers for some time.