The Federal Reserve is closely monitoring tariff pressures as it prepares its inflation report, which could potentially show the impact of trade tensions on its preferred inflation measure.
Tariffs have been a major source of uncertainty in recent months, and their effects are being felt across various sectors. The Fed, however, has its own preferred inflation measure that accounts for certain types of prices, such as those related to healthcare and education expenses.
While tariffs do impact prices, it’s not clear whether this will be reflected in the Fed’s inflation report. The report is primarily based on data from the Personal Consumption Expenditures (PCE) price index, which excludes these types of costs.
Source: https://www.ft.com/content/057f2c35-3e0e-4fc6-be64-7d0af842032f