00:00We have stressed that it will be very difficult
00:02to assess the likely economic effects of higher tariffs
00:05until there is greater certainty about the details,
00:08such as what will be tariffed, at what level,
00:10and for what duration, and the extent of any retaliation
00:14from our trading partners.
00:16While uncertainty remains elevated,
00:17it is now becoming clear
00:18that tariff increases will be significantly larger
00:21than expected, and the same is likely to be true
00:24of the economic effects,
00:26which will include higher inflation and slower growth.
00:28The size and duration of these effects remains uncertain.
00:34While tariffs are highly likely to generate
00:36at least a temporary rise in inflation, it is also possible
00:40that the effects could be more persistent.
00:42Avoiding that outcome would depend
00:44on keeping longer-term inflation expectations well anchored,
00:47on the size of the effects, and on how long it takes for them
00:49to pass through fully to prices.
00:52Our obligation is to keep longer-term inflation
00:55expectations well anchored and to make certain
00:58that a one-time increase
00:59in the price level does not become an ongoing
01:02inflation problem.
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