Tariffs and Turmoil: Fed's Dilemma Amid Trump Administration's Economic Impact

Federal Reserve Chair Jerome Powell warns that new tariffs could increase inflation and slow economic growth. While there is uncertainty about the tariffs' full impact, the Fed is focused on controlling inflation. Powell suggests that interest rates will remain unchanged amidst calls from President Trump to cut them.

Federal Reserve Chair Jerome Powell warned that the Trump administration's new tariffs could lead to higher inflation and slower economic growth than anticipated. Speaking at a conference, Powell emphasized the potential for temporary inflation increases and the uncertainty surrounding the tariffs' effects.

Despite calls from President Donald Trump to cut interest rates, Powell indicated that the Federal Reserve is likely to maintain its current rate of about 4.3%, prioritizing inflation control over immediate economic stimulus. The impact of tariffs remains unclear, leading many businesses to delay investments, Powell noted.

Powell's remarks followed Trump's announcement of sweeping tariffs, which have affected global markets and sparked retaliation from China. The Federal Reserve faces a complex challenge of balancing inflation control with economic growth, amidst ongoing shifts in business and consumer sentiments.

(With inputs from agencies.)