New York Federal Reserve President: Tariffs and Immigration Policies Could Lead to Slower US Economic Growth, Rising Unemployment and Inflation.

John Williams, president of the Federal Reserve Bank of New York, said on Friday that the United States economy faces risks of slowing growth, rising unemployment, and worsening inflation in the future due to the Trump administration's higher tariffs and tightened immigration measures. Speaking at an event in San Juan, Puerto Rico, Williams pointed out that consumer and business confidence has significantly declined recently due to President Trump's drastic adjustments to trade policies, exacerbating volatility in US and global financial markets. He said, "While uncertainty about the economic outlook comes from multiple factors, the impact of tariffs and trade policies on the economy undoubtedly ranks first." However, Williams believes that the current economic data still support the Federal Reserve maintaining interest rates unchanged. He noted, "Given that the labor market remains strong and inflation is still above the 2% target, the slightly restrictive monetary policy stance currently in place is entirely reasonable and provides us with room to observe changes in data." This week, the Trump administration slowed down plans to impose "reciprocal tariffs" on multiple countries, opting for a uniform 10% tariff rate, but raised tariffs on China to 145%. At the same time, the US government is also advancing stricter immigration enforcement measures. Williams said that reduced immigration will further slow labor force growth, which, combined with the uncertainty caused by tariffs, will significantly drag down economic performance. He predicted that US real GDP growth will slow significantly, possibly falling below 1%. Currently, the US unemployment rate is at 4.2%, and Williams expects it to rise to between 4.5% and 5% within the next year. Regarding inflation, he expects US inflation rate to be between 3.5% and 4% this year, higher than the current level of 2.5%. Previous data showed that US core PCE price index in February increased by 2.5% year-on-year, still above the Fed's 2% target. The Federal Reserve has not adjusted policy rates so far this year, but officials generally emphasize the need to cautiously address the risks of rising inflation and maintain stable public expectations of inflation. According to the latest data released by the University of Michigan, US consumers expect prices to rise by an average of 4.4% annually in the next five to ten years, the highest since 1991, up from 4.1% last month. The survey found that about two-thirds of respondents mentioned "tariffs" unprompted. In response, Williams said that although long-term inflation expectations remain relatively stable, he will closely monitor subsequent data. He emphasized, "In times of current turmoil and uncertainty, maintaining long-term inflation expectations anchored is crucial to achieving sustained price stability." He added, "We must ensure stable inflation expectations, which will help the Fed strike a balance between maximum employment and bringing inflation back to the long-term 2% target."