Powell: Trump Tariffs Risk Inflation, Growth Slowdown

Federal Reserve Chair Jerome Powell warned that President Trump's aggressive tariff policies are likely to cause higher inflation and slower economic growth, creating a potential conflict with the Fed's mandate for stable prices and maximum employment. Powell explained that tariffs increase costs for importers and may reduce business optimism, making economic forecasting more difficult. He stated that the inflationary impact could be temporary or more persistent depending on the extent and duration of the tariffs. The Fed has decided to keep interest rates steady while awaiting further clarity on the effects of these economic policies. Powell reiterated the commitment to anchoring long-term inflation expectations, cautioning that ongoing inflation and a weakening economy could force the Fed to make difficult policy choices. Financial markets responded negatively to his comments, highlighting investor concern over the uncertainty caused by tariffs.