President Trump’s tariffs on imported Chinese goods could boost U.S. inflation closer to the target rate of 2 percent, San Francisco Federal Reserve President Mary Daly tells FOX Business.
"It will affect [inflation] in the way we hope which is to move it back up to 2 percent…but not above,” she said during an interview with FOX Business’ Edward Lawrence.
Inflation rose 1.6 percent in March from a year ago, missing the U.S. central bank’s 2 percent target adopted in 2012. The inflation rate measures the rise in the average price of goods and services in an economy.
The U.S. economy continued its pace of growth adding 263,000 new jobs in April, with wages rising and the unemployment rate at the lowest level in nearly 50 years.
Daly said the economy will maintain its sustainable growth pace, but slightly slower than the previous year.
“My expectation, it’ll be closer to our sustainable pace further tightening the labor market,” she said. “We should push up wage growth and push inflation towards our 2 percent target.”
The Commerce Department’s recent data shows U.S. gross domestic product rose at a 3.2 percent annualized rate, higher than what most analysts expected of 2.5 percent.
Daly said the economy is moving rapidly and slower growth doesn’t indicate the economy has stalled.
“We are still growing with good momentum, strong domestic confidence and I see the future as good,” she said.