Fed Faces Tariffs Turmoil Amidst Inflation Concerns

Fed Chair Jerome Powell highlighted the economic uncertainties following President Trump's new tariffs, which could lead to higher inflation and slower growth. While the Fed awaits more data, markets anticipate potential rate cuts as global equity markets drop and concerns of persistent inflation rise.

President Donald Trump's unexpected new tariffs have stirred economic uncertainties, potentially leading to inflation and slower growth, Federal Reserve Chair Jerome Powell emphasized on Friday. His remarks suggest challenging decisions ahead for the central bank.

Powell expressed concerns over a "highly uncertain outlook" that risks undermining the Fed's objectives of 2% inflation and maximum employment. With global markets reeling, Powell acknowledged that the Fed faces similar uncertainties as investors.

While tariffs are expected to temporarily elevate inflation, Powell warned of persistent price pressures and reiterated the Fed's duty to manage long-term inflation expectations. As the tariff impacts become clearer, markets anticipate multiple rate cuts as the Fed navigates this challenging economic landscape.

(With inputs from agencies.)