US Federal Reserve Chair Jerome Powell has warned that Donald Trump’s global tariffs will raise prices and slow down economic growth, defying the president’s demands for an immediate interest rate cut. Despite the US economy remaining robust, Powell cautioned that there is high uncertainty over its direction, citing “downside risks” that have risen.
The Fed chair stressed that Trump’s tariffs are more extensive than expected and warned of a larger impact as a result. This contradicts President Trump’s claims that his tariffs plan will bring down prices, despite inflation holding firm. Powell said the economic effects will include higher inflation and slower growth.
Powell’s warning echoes those of many economists, who predict that the tariffs will lead to price increases. The Fed chair noted that while uncertainty remains high, it is becoming clear that the tariff increases will be significantly larger than expected. However, he also warned that the size and duration of these effects remain uncertain.
The president has taken to social media to call for the Fed to lower interest rates, which has raised concerns about the central bank’s independence. Powell has maintained that the Fed will only cut rates when policymakers decide it is the right time to do so.
Source: https://www.theguardian.com/us-news/2025/apr/04/trump-tariffs-higher-inflation-slower-growth-fed-chair