New York Fed president John Williams on Tuesday defended the bank's research on President Donald Trump's tariffs, which drew the White House's ire.
Research from the most influential regional bank in the Federal Reserve system found that nearly 90 per cent of the tariffs' economic burden last year fell on US companies and consumers. In the first eight months of 2025, 94 per cent of tariffs were paid domestically while 6 per cent were absorbed by foreign exporters.
Those findings cut into the Trump administration's arguments that the costs would be absorbed by exporters rather than lead to an increase in prices.
White House economic adviser Kevin Hassett went so far as to suggest the New York Fed's researchers should be “disciplined” and that it was “the worst paper I've ever seen in the history of the Federal Reserve system”. He later withdrew from those comments.
“Research on tariffs is … not only carefully done and builds off work that's been vetted and published in journals in the past, but it's also very consistent with findings from other researchers and other institutions looking at the issue in few different ways,” Mr Williams said to reporters after a conference in Washington.
“So, from the point of view of the criticism of that, people can criticise the research and disagree with it. That's normal. It's not in any way partisan or political.”
Mr Williams told the conference that tariffs “have overwhelmingly" been borne by US firms and consumers, adding that they have led to an increase in US prices of imported goods.
He also said that the increase in tariffs has contributed to about “one half to three quarters of a percentage point to the current inflation rate of about 3 per cent”, compared to the Fed's 2 per cent target. He also said progress towards that target has temporarily stalled “owing to the effect on tariffs”.
After pausing interest rate cuts last month, US Fed officials have suggested they are inclined to wait and see how the economy further develops before making their next monetary policy move.
While inflation remains above target, the Fed is also monitoring what is considered to be a low-hire, low-fire labour force. Unlike most central banks, the Federal Reserve has a dual mandate of employment and inflation.
Despite the stalled progress in inflation, Mr Williams said he has seen encouraging trends, saying that there are no signs of major second-round effects from tariffs or global supply-chain bottlenecks. He expects inflation to start coming down later this year.
Mr Williams, who holds a permanent vote on the Fed's rate-setting body, said he expects further reductions could be warranted this year if inflation pressures moderate as he expects them to.
The Fed holds its next two-day meeting from March 17-18, where traders expect the central bank to hold rates steady between the range of 3.50 and 3.75 per cent.
