Americans’ concerns about rising inflation rates introduce new worries for the Federal Reserve

By Madalyn Jimiera
The rising costs of eggs and the potential economic impacts of tariffs are just some of the factors that Americans are considering as they brace for higher prices due to inflation.

While these are just worries, they could lead to larger problems for policymakers and Trump, whose central aim during his campaign was to control prices. Furthermore, controlling expectations about inflation can help control inflation itself. Workers and businesses may demand raises or increase prices if they fear a rise in the cost of living or materials and labor. 

Consumers’ expectations for inflation experienced the biggest one-month jump since 2021 in February, according to a survey by the University of Michigan. These expectations have also shown a huge partisan split, with Democrats’ inflation expectations sharply rising as Republicans’ fall. However, other surveys, such as one from the Federal Reserve Bank of New York in January do not show a rise in inflation expectations. 

Economists say what central banks should fear most is if inflation expectations become “unanchored,” or move enough to suggest that there is little confidence that inflation rates will return to the two percent target. Officials at the central bank are downplaying these concerns. 

“You need at least two or three months for that to count,” said Austan Goolsbee, president of the Federal Reserve Bank of Chicago.

Charles Evans, the former president of the Chicago Fed, said the Fed’s are taking risky strategies, and advised them to stay “cautious” about additional interest rate cuts this year. 

New fears arise as the Federal Reserve’s independence from the White House is tested after Trump’s executive order to expand his power over government agencies was signed. Doing so could undermine confidence in the central bank’s ability to control inflation rates and lead inflation expectations to rise even more.