Federal Reserve Chair Jerome Powell expressed concerns about the impact of President Donald Trump’s tariffs policy, citing higher inflation and slower economic growth. His remarks led to a 1.7% drop in the Dow Jones Industrial Average and significant losses for other major indexes.
Powell warned that the “level of the tariff increases announced so far is significantly larger than anticipated,” which will lead to increased inflation and slower growth. He noted that investors are facing uncertainty, but emphasized that this volatility reflects the significance of the policy changes rather than abnormal market behavior.
The Fed had previously expected higher inflation and slower economic growth due to Trump’s tariffs, but still deemed the US economy “solid.” Powell indicated that policymakers may approach interest rates with restraint as they monitor the effects of the tariffs. The next interest-rate decision by the Fed is scheduled for May 7.
This comes amid a trade war between the US and China, where both countries have imposed significant tariffs on each other’s goods. Despite the uncertainty, Powell reassured investors that the US economy remains in a “solid position.”
Source: https://abcnews.go.com/Business/fed-chair-powell-sounds-alarm-tariffs-sending-stocks/story?id=120863770