Fed Chair Powell Warns on Tariffs Impact as Economic Growth Slows

Federal Reserve Chair Jerome Powell highlighted potential economic slowdowns due to tariffs, citing modest consumer spending and increased imports. Powell suggests maintaining interest rates for now. Market reactions show declines in stocks and bonds, with investors wary of inflation and growth uncertainties.

Federal Reserve Chair Jerome Powell has expressed concerns over the potential negative impact of tariffs on the U.S. economy. Speaking on Wednesday, Powell pointed to modest consumer spending and an influx of imports, suggesting these could drag down gross domestic product estimates.

Powell recommended maintaining steady interest rates to assess how policy changes evolve. His comments seem to challenge the administration's view that tariffs would cause only a short-lived inflation, warning instead of possible prolonged economic difficulties and inflationary pressures.

The market reacted by extending stock declines, with Treasury yields and the dollar index taking a hit. Investors are apprehensive, foreseeing stubborn inflation paired with slowing growth as Powell confirms fears of economic uncertainty.

(With inputs from agencies.)