Fed Chairman warns that Trump’s tariffs could lead to increased inflation and slower economic growth.

Federal Reserve Chairman Jerome Powell addressed the economic implications of President Donald Trump’s recently announced global tariffs during a conference for business journalists in Arlington, Virginia. In his remarks, Powell indicated that these tariffs, which have been dubbed “Liberation Day” by the White House, are expected to contribute to increased inflation and diminished economic growth in the near term.

Powell articulated that while a temporary uptick in inflation is likely a direct consequence of the tariffs, there remains a possibility that these effects could become more enduring. He underscored the necessity for the Federal Reserve’s monetary policy to remain adaptable as the situation evolves. Powell emphasized that the board will closely monitor the implementation of Trump’s tariff policies before making any adjustments to interest rates. He stated that the future path of monetary policy is unclear at this time, necessitating a wait-and-see approach.

The Fed chairman’s comments came just two days after President Trump revealed a comprehensive array of tariffs affecting imports from various nations. These measures will impact not only longtime allies but also smaller countries with minimal trade volume with the United States. Powell noted the challenges in accurately forecasting the economic repercussions of these tariffs amid the ongoing uncertainty. He pointed out that a clearer understanding of the specific items being tariffed, the applicable rates, and the duration of these duties will shed light on their potential economic effects.

Since the announcement, the tariffs—ranging from 10% on imports from countries like Singapore to as much as 46% on goods originating from Vietnam—have led to significant market volatility. The stock market experienced substantial declines, exacerbated by investor reactions to the unpredictable nature of retaliatory measures from global trading partners.

Powell’s engagement at the Society for Advancing Business Editing and Writing conference was pre-scheduled, and his comments indicate the Federal Reserve’s keen interest in the implications of trade policy on the broader economy. As events unfold, the complexity of the tariff situation presents additional challenges for both businesses and policymakers aiming to navigate the evolving landscape of international trade relations.

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