Washington. Widespread deportation of foreign-born workers from the United States would likely disrupt some businesses, but the impact on inflation and the broader economy would depend on the details, Minneapolis Federal Reserve Bank President Neel Kashkari said Sunday. .
Kashkari, in his appearance on the CBS program “Face the Nation,” offered his point of view on the economic impact of the campaign promise of the president-elect of the United States, Donald Trump, to deport immigrants who are in the United States. United illegally.
“If you just assume that people are working – whether working on farms or working in factories – and those businesses are now losing employees, that would probably cause some disruption,” Kashkari said.
“The implications are not entirely clear to me,” Kashkari added. “Ultimately, between the business community, Congress and the Executive Branch will have to figure out how they would adjust.”
Uncertainty over rate cuts
Trump’s election last Tuesday to a second four-year term may raise new uncertainties for the US central bank, which continues to consider interest rate cuts as inflation approaches the Fed’s 2 percent target. Federal cut the reference interest rate by a quarter of a percentage point last week, to between 4.5 and 4.75 percent.
Kashkari said that while the current expectation is for another quarter-point cut at the Fed’s December meeting, “we have to see what the data really looks like” before deciding.
“We want to be confident that inflation is going to come down to our target of 2 percent,” from its current level of about half a percentage point above that target, Kashkari said.
Duty; the risk of “an eye for an eye”
Along with going after undocumented immigrants, Trump has said he will impose sweeping tariffs on imported goods and seek tax cuts, which could increase federal deficits. How those policies affect inflation, Kashkari said, will depend on the details and factors such as how other nations respond to U.S. tariffs.
A tariff, a fee or tax levied when goods enter the country, can cause a one-time increase in prices but have no impact on long-term inflation, Kashkari said.
But “the challenge is if there is an eye for an eye,” Kashkari said. “If it is a country that imposes tariffs and then responds, and the escalation is increasing (…) we will have to wait to see what is applied and how other countries respond. “Right now we are all making assumptions.”
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