Federal Reserve Chair Jerome Powell said President Donald Trump’s tariffs will raise inflation and lower growth, and indicated that the Fed won’t move on interest rates until it gets a clearer picture on the ultimate impacts. The announcement of new reciprocal levies has left the Fed with a “highly uncertain outlook,” according to Powell.
Powell stated that while the economy appears strong currently, he stressed the threat posed by tariffs and emphasized the need for the Fed to keep inflation in check. He said the central bank is well-positioned to wait for greater clarity before considering adjustments to its policy stance, as it’s too soon to determine the appropriate path for monetary policy.
The comments came after Trump called on Powell to cut interest rates due to decreasing inflation. However, Powell refused to respond, citing that it’s not his place to do so.
The market reaction has been significant, with a torrent of selling on Wall Street following the announcement of 10% tariffs across-the-board and higher reciprocal charges for many key trading partners. Markets are pricing in aggressive interest rate cuts starting in June, but Powell emphasized the need for the Fed to prioritize inflation control.
Powell acknowledged that the impact of tariffs will be uncertain and could potentially lead to persistent price increases if not managed carefully. He stressed the importance of keeping longer-term inflation expectations anchored and ensuring that a one-time increase in prices does not become an ongoing inflation problem.
Source: https://www.cnbc.com/2025/04/04/powell-sees-tariffs-raising-inflation-and-says-fed-will-wait-before-further-rate-moves.html