FOMC Meeting Minutes: Fed officials debate inflation risks from Trump tariffs

The Federal Reserve on Wednesday released the minutes of the Federal Open Market Committee meeting that was held on March 18–19, 2025. The minutes for each regularly scheduled meeting of the Committee are generally published three weeks after the day of the policy decision.

Tariffs were cited 18 times in the minutes of the March FOMC meeting. “The Minutes were heavily focused on the effects of higher tariffs, referenced eighteen times as policymakers warned of uncertainty around the magnitude and persistence of such effects.

Market volatility could remain elevated, despite the 90-day pause on tariffs for non-retaliating countries. Hard data from the early part of the year suggests the economy is slowing, irrespective of trade policy.

Clearly, the removal of extreme tariff rates will ease some of the concerns about the outlook for the economy. The Fed will remain committed to both sides of their mandate and will not aggressively cut rates when inflation is running hot,” says Jeffrey Roach, Chief Economist for LPL Financial.

Tariff and Inflation Takeaways from the Minutes

With regard to the outlook for inflation, participants judged that inflation was likely to be boosted this year by the effects of higher tariffs, although significant uncertainty surrounded the magnitude and persistence of such effects.

Several participants noted that the announced or planned tariff increases were larger and broader than many of their business contacts had expected.

Several participants also noted that their contacts were already reporting increases in costs, possibly in anticipation of rising tariffs, or that their contacts had indicated willingness to pass on to consumers higher input costs that would arise from potential tariff increases.

A couple of participants highlighted factors that might limit the inflationary effects of tariffs, noting that many households had depleted the excess savings they had accumulated during the pandemic and were less likely to accept additional price increases, or that stricter immigration policies might reduce demand for rental and affordable housing and alleviate upward pressures on housing inflation.

A couple of participants noted that the continued balance in the labor market suggested that labor market conditions were unlikely to be a source of inflationary pressure.

A couple of participants noted that, in the period ahead, it could be especially difficult to distinguish between relatively persistent changes in inflation and more temporary changes that might be associated with the introduction of tariffs.

Participants commented on a range of factors that could influence the persistence of tariff effects, including the extent to which tariffs are imposed on intermediate goods and thus affect input costs at various stages of production, the extent to which complex supply chains need to be restructured, the actions of trading partners in responding with retaliatory increases in tariffs, and the stability of longer-term inflation expectations.

Almost all participants pointed out that many market- or survey-based measures of near-term expected inflation had increased recently. Participants generally noted that most measures of longer-term expected inflation remained well anchored, a factor likely to put downward pressure on inflation.