Core Insights - The Federal Reserve's latest research indicates that real-time tariff effects are impacting consumer prices, with an expected increase of 0.1% in core inflation by 2025 [1] - The study confirms that tariff changes quickly and directly translate to price levels, with tariffs from 2018-2019 fully transmitted to consumer prices within two months [2] - The analysis method used in the study focuses solely on the impact of U.S. tariffs on other countries, excluding retaliatory tariffs and other potential effects on productivity and employment [1] Group 1: 2018-19 Tariff Impact Analysis - The research developed a theoretical prediction of tariff changes on Personal Consumption Expenditures (PCE) prices, finding a significant and rapid impact on consumer prices [2] - The transmission coefficient for the tariffs implemented in 2018-19 was approximately 1.75, indicating a strong relationship between tariff effects and inflation [2] - The study highlighted that while tariffs significantly affected certain PCE categories, other factors contributed to overall inflation levels being below typical values from 2000-2017 [2] Group 2: 2025 Tariff Real-Time Impact Assessment - The analysis of tariffs implemented in early 2025 revealed a lower transmission coefficient of 0.54 compared to the 2018-19 tariffs [4] - The study estimated that the tariffs have already caused a 0.33 percentage point increase in core PCE prices, leading to an overall increase of 0.08 percentage points in core PCE [4] - Three main factors were identified for the lower transmission coefficient: a decrease in the share of imports from the affected countries, delayed implementation of tariff policies, and increased frequency of price adjustments by businesses due to recent inflation [5]