President Donald Trump‘s trade tariffs continue to weigh on the outlook for growth and inflation, raising concerns over how long the Federal Reserve can stick with its planned cycle of interest rate cuts.
While the central bank moved forward with a 25-basis-point cut at the September meeting, the internal debate revealed that tariff-driven price pressures remain a key obstacle to bringing inflation back to the 2% target.
Most members agreed that the current trade policy is pushing inflation up—and may continue doing so through next year.
Inflation May Not Fall To 2% Until 2027
The Fed’s latest economic projections show inflation returning to the 2% target only in 2027. That’s one year later than previously expected, and a clear signal that the central bank sees the current price pressures as more persistent.
“Inflation will not likely reach target until late 2027 which means …