NextFin news, WASHINGTON, D.C., September 25, 2025 (Thursday) — Kevin Hassett, a former White House economic adviser, said on Thursday that the Federal Reserve is moving toward a consensus that tariffs cause a one-time increase in prices rather than ongoing inflationary pressure. This marks a shift in the central bank's understanding of how tariffs affect the economy.
Hassett made these remarks during an interview reported by Fox Business and covered by StreetInsider.com. He explained that tariffs, which are taxes on imported goods, lead to a one-time price level increase but do not cause persistent inflation beyond that initial adjustment.
The Federal Reserve, responsible for setting U.S. monetary policy, has been closely monitoring inflation trends and the effects of trade policies, including tariffs imposed during recent years. Hassett's comments suggest that Fed officials are increasingly viewing tariff-induced price changes as temporary shocks rather than drivers of sustained inflation.
This evolving consensus could influence the Fed's future decisions on interest rates and monetary policy. If tariffs are seen as causing only a one-time price increase, the Fed may be less inclined to tighten policy aggressively in response to tariff-related price changes.
Kevin Hassett, who served as Chairman of the Council of Economic Advisers during the Trump administration, has been a vocal defender of tariffs in the past, arguing that their impact on consumer prices would be limited due to ongoing trade negotiations and adjustments in supply chains.
The timing of Hassett's statement comes amid ongoing debates within the Federal Reserve about the best approach to managing inflation and economic growth. His insights provide a window into the internal discussions shaping U.S. economic policy as of late September 2025.
Source: StreetInsider.com, Fox Business, September 25, 2025.
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