NEW YORK (Reuters) - The full suite of tariffs sought by the Trump administration would have created notable upward pressure for already high levels of inflation, a report by the Federal Reserve Bank of Boston released on Thursday said. 

The 25% tariffs Trump was to impose on Mexico and Canada, joined with a 10% tariff on China, would have pushed up underlying price pressures by as much as 0.8 percentage point, as measured by the central bank's preferred price pressure gauge, the personal consumption expenditures price index, the Boston Fed paper said.  

That size of gain would likely have been a problem for the Fed given that it is still facing inflation above its 2% target. The PCE price index was up 2.6% in December from the same month in 2023, while core PCE, which is stripped of food and energy, was up 2.8% over the same period. 

The Fed expects inflation pressures to ease gradually but there is considerable uncertainty about how tariffs, which would increase prices for American consumers, will affect the inflation data. 

Speaking in a television interview on Monday, Boston Fed President Susan Collins said, "the kind of broad-based tariffs that were announced over the weekend, one would expect to have an impact on prices." She added that "with broad-based tariffs, you actually would not only see increases in prices of final goods, but also a number of intermediate goods."

After lowering rates by a full percentage point last year, the Fed paused its easing campaign at the end of January, amid uncertainty about how the economy would fare under the aggressive policy changes envisioned by President Donald Trump. Fed officials are also looking for clarity on Trump's trade policies.

A signature aspect of Trump's agenda has been aggressive tariffs, which are de facto import taxes paid by Americans, on U.S. trading partners. 

The inflationary impact considered by the paper took as its starting point the tariffs on Canada, Mexico and China that were scheduled to go into effect. But on Monday, Canada and Mexico earned reprieves and it is unclear what will happen next.

The Boston Fed paper noted its analysis assumed that tariffs would be passed along and accepted by consumers. 

Some of the inflationary pressure might be blunted, with the study authors noting "we would expect general equilibrium effects, including those related to retaliatory actions, domestic and foreign monetary policy, and exchange rates to dampen our inflation estimates due to their suppressive effect on economic growth."