Bernanke said the policies put in place by Trump may not necessarily cause a big shift in inflation dynamics. He claimed that:

“I agree that Trump’s policies, regardless of their merits on a public finance basis, are likely to be modest in terms of their effect on the inflation rate. Barring some very unusual situation, including geopolitical risks, it does not look like they will really change the trajectory of inflation radically.” “

Adding that the tax cuts that Trump wants to achieve are already pretty much in place. However, the main issue is the tariffs, as it is uncertain whether Trump will use them for trade or keep them permanently. Bernanke says import tariffs will reduce output and raise inflation, putting the Fed in a tough spot to respond.

Well, Trump’s tariffs remain one of, if not the biggest known unknown in the markets right now. And that will be a key influence on Fed policy in the coming months. So we’ll have to wait and see how he wants to play it. Big boss.