WASHINGTON: Federal Reserve Chair Jerome Powell warned that Trump’s tariffs could cause inflation to rise and stay high. He called the economic outlook “highly uncertain.” Powell said tariffs might lead to both higher unemployment and prolonged inflation. He emphasized that these trade policies could create significant economic disruptions. Speaking in Arlington, Virginia, Powell stated that inflation may not be temporary.
Rate Policy Shift
Powell suggested the Federal Reserve might keep interest rates on hold longer. The Fed’s next policy meeting is scheduled for May 6-7. He said Trump’s tariff expansion was far greater than expected. Powell predicted these tariffs would have stronger economic effects than initially thought. Speaking at the Society for Advancing Business Editing and Writing Conference, he called the situation unpredictable.
Tariff Expansion
Trump’s tariffs now impact $2.5 trillion in imports, compared to $380 billion in his first term. Powell initially believed inflation from tariffs would be short-lived. He now admits the inflationary impact might be prolonged. He warned that higher inflation and slower growth could persist. The Federal Reserve must carefully monitor these risks.
Trump’s Reaction
Trump posted on Truth Social urging Powell to cut interest rates. He claimed energy and inflation were already down. Trump insisted it was the “perfect time” for a rate cut. He criticized Powell for being “late” and playing politics. Trump said America was winning and called for immediate action.
Economic Outlook
Powell remains cautious about making premature rate cuts. He stressed that tariffs have unpredictable consequences. The Federal Reserve aims to maintain economic stability. Markets are closely watching how tariffs affect inflation. The Fed’s next decision could have major consequences.
