Federal Reserve Chair Jerome H. Powell said April 4 that President Donald Trump’s sweeping tariffs could raise inflation and slow growth; however, it’s “too soon to say” how the Fed will adjust monetary policy as a result.
“While uncertainty remains elevated, it is now becoming clear that the tariff increases will be significantly larger than expected, and the same is likely to be true of economic effects, which will include higher inflation and slower growth,” Powell said at a conference hosted by the Society for Advancing Business Editing and Writing. “The size and duration of these effects remains uncertain.”
On April 2, Trump unveiled a host of tariffs that include a minimum baseline of 10% tariffs on all imports — with some countries hit harder than others — and 25% tariffs on automobiles imported from other nations, among other things.
Powell stressed that “it is not our (the Fed’s) role to comment on those policies. Rather, we make an assessment of their likely effects, observe the behavior of the economy, and set monetary policy in a way that best achieves our dual-mandate goals,” referencing stable prices and maximum employment.
The central bank is “well-positioned to wait for greater clarity before considering any adjustments to our policy stance,” Powell said, later adding that “we don't need to be in a hurry.”
“If you fast-forward a year from now, the uncertainty should be much lower,” the Fed chair contended. “The actual effects of the policies should then be pretty manifest and clear.”
