Richard Clarida Warns of Inflation Risk from Tariffs – Coincu

Richard Clarida, former Vice Chairman of the Federal Reserve and current PIMCO advisor, has expressed concerns about escalating inflation due to rising tariffs in the U.S. as of June.

The rising tariffs, reaching the highest level since 1937, may propel inflation above 3%. This could challenge the Federal Reserve’s forecast for rate cuts.

Tariff Hikes Could Push U.S. Inflation Above 3%

Richard Clarida highlighted a significant rise in U.S. tariff rates, with the average effective rate hitting 15.6% as of June 2025. This increase, unseen since 1937, could push inflation back above 3%. This scenario could cause a reassessment of the Federal Reserve’s forecast for two rate cuts this year.

The immediate implication is a heightened doubt in the market about Federal Reserve policy. Clarida questioned if the markets would still trust the independence of the new chairman, suggesting that stocks and bonds could face instability.

“If the market doubts the new chairman’s independence, the stock and bond markets will react sharply.” — Richard Clarida, Former Vice Chairman of the Federal Reserve, Advisor at PIMCO

Sharp reactions in financial markets, driven by this uncertainty are likely if the Fed’s credibility wavers.

Economists and Investors React to Inflation Concerns

Did you know? The term “bond vigilantes,” which refers to investors selling bonds and driving yields higher during fiscal missteps, gained prominence in the 1980s. Recent yields suggest their influence might be resurfacing amid tariff-induced inflation concerns.

According to CoinMarketCap, Bitcoin (BTC) is priced at $105,229.57, with a market cap of $2.09 trillion. The 24-hour trading volume decreased by 3.73%. Notably, BTC has experienced volatility: down 2.18% in 24 hours, but up 24.13% over the last 60 days.

The Coincu research team forecasts that if inflation exceeds expectations, the Federal Reserve may reconsider its monetary policies, possibly delaying or adjusting the projected rate cuts. This environment could stir risk sentiment in financial markets, including digital currencies. For instance, the Securities and Exchange Commission’s handling of crypto ETF decisions might also influence market dynamics. Meanwhile, large firms like Binance are making significant moves as seen in recent investments that impact their strategic operations.