From CNBC: 2025-04-04 11:25:00

Federal Reserve Chair Jerome Powell warned that President Trump’s tariffs could hike inflation and dampen growth. Powell emphasized the need to keep inflation in check and said the Fed will wait for more clarity before adjusting policy. Trump criticized Powell for not cutting interest rates as stocks tumbled following the tariff announcement.

Powell hinted at potential interest rate cuts in response to the tariffs, but emphasized the Fed’s focus on keeping inflation expectations in check. With markets predicting aggressive rate cuts, Powell faces the challenge of balancing inflation concerns with the impact of Trump’s trade policies on the economy.

Despite rising inflation concerns and uncertainty over tariffs, Powell stated that the economy remains strong with solid labor market conditions. While acknowledging the potential impact of tariffs on inflation, Powell stressed the importance of anchoring longer-term inflation expectations to align with the Fed’s objectives.

Core inflation was reported at 2.8% annual rate in February, exceeding the Fed’s 2% target. Powell highlighted consumer surveys reflecting worries about inflation and future growth, emphasizing the need to maintain inflation expectations in line with the Fed’s goals amidst market volatility and trade tensions.

Read more: Powell sees tariffs raising inflation and says Fed will wait before further rate moves