Federal Reserve Candidates: Tariffs Do Not Cause Inflation

In statements consistent with U.S. President Donald Trump's calls to lower interest rates, two prominent economists nominated for positions on the Federal Reserve Board confirmed that tariffs are not a driving factor of inflation. These remarks came during separate interviews with "CNBC" on Tuesday, August 12.

Stephen Miran, former chairman of the White House Council of Economic Advisers, who was appointed by Trump to replace former Fed governor Adriana Kugler, stated: "There is still a complete absence of any evidence of inflation caused by tariffs." He added: "Many who were expecting... the worst and pessimism have not seen their expectations realized, and that remains the case."

For his part, James Bullard, former president of the Federal Reserve Bank of St. Louis and a potential candidate to succeed current Fed Chair Jerome Powell, noted that economic data does not show an inflationary impact from tariffs. Bullard predicted that the Federal Open Market Committee would begin lowering interest rates by September, with a possibility of a full percentage point reduction over the next 12 months, bringing the interest rate closer to "neutral."

Bullard explained: "The committee paused the interest rate cut program when the issue of tariffs arose six months ago, and now we have compelling evidence of that for six months." He added: "I really don't think tariffs cause inflation. Taxes do not cause inflation. So, what we see in the data are very faint effects, which are one-time increases in the price level."

Despite not specifying how they would vote on interest rates, both Miran and Bullard praised Trump's growth-supporting economic agenda, in line with the president's view that inflation is not an urgent problem.

These statements came after data from the Bureau of Labor Statistics showed that the inflation rate, according to the Consumer Price Index, reached 2.7% for July, exceeding the Fed's target of 2%, but slightly below Wall Street's expectations.

In response to the data, Trump renewed his criticisms of the Federal Reserve via the "Truth Social" platform, calling for a 3 percentage point cut in interest rates and continuing his attack on current Fed Chair Jerome Powell.

In response, Bullard said: "He (Trump) has a long history in real estate markets. It's all about borrowing money at the lowest possible interest rate. That's good for him. He has opinions, but many people have opinions."

The candidates emphasized the importance of the Federal Reserve's independence, especially amid repeated pressures from the White House during Trump's tenure.