PANews reported on April 11 that according to Jinshi, the Fed's Musallem said he is closely watching whether the rise in short-term inflation expectations will penetrate into long-term expectations, which may make it more difficult to fight inflation and reduce the Fed's flexibility to deal with a weak labor market. He pointed out that there is a high degree of uncertainty about the effects and timing of tariffs and other new policies, and there is a "clear possibility" that inflation will re-accelerate even if the job market weakens. He said that the Fed's policy is in a favorable position and should remain vigilant. "I am cautious about the assumption that the impact of 'raising tariffs on inflation is only temporary or limited,'" he said. "I think it is appropriate to 'fend off' second-round effects through monetary policy, although in actual circumstances, it may be a challenge to distinguish between potential inflation and the direct, indirect and second-round effects of tariffs."
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