The higher tariffs would crimp investment spending as well as consumption, the bank's economists said.
She also said there's “a little bit more slack” now in the US job market."
He cautioned that investors are overestimating the amount of Fed easing to come.
The bank also sees the Fed cutting rates by half a percentage point in September and November.
“Calm is important at a moment like this,” former Fed economist Claudia Sahm said.
The slide in equities is chiefly the result of internal market dynamics and not the economy, he said.
Relying on tariffs for revenue would lead to a “downward spiral” in the economy, the former Treasury secretary said.
The Nobel laureate in economics also played down worries about the level of federal debt.
The former IMF chief economist said more borrowing will spur volatility in inflation and interest rates.
The economists expect the Fed's easing will end when the benchmark rate hits a target range of 3.25% to 3.5%.
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