Powell's Balancing Act: Navigating Economic Uncertainty Amid Tariff Turmoil

Federal Reserve Chair Jerome Powell faces a challenging economic landscape as U.S. tariff hikes and unpredictable signals from the Trump administration create uncertainty. Powell emphasizes a cautious approach, avoiding quick rate cuts despite rising inflation fears, while observing potential shifts in economic policy and market reactions.

Federal Reserve Chair Jerome Powell is wrestling with a complex economic situation amid U.S. tariff hikes and conflicting signals from the Trump administration. In a statement on Friday, Powell highlighted the need for a calculated and patient approach, refraining from immediate interest rate cuts despite escalating inflation concerns.

Powell underscored that while job growth remains strong, the economy faces unpredictability with tariffs and potential fiscal shifts. The Fed adopts a principle of fast, decisive action in crises but prioritizes avoiding hasty moves that might need reversal, as heightened inflation and economic volatility loom.

The situation mirrors past market interventions but differs with tariff-driven uncertainties. Economists warn of recession risks, projecting slowed GDP growth and rising unemployment. Powell stresses the difficulty of simultaneous inflation and employment challenges, choosing to wait for clearer economic directions.

(With inputs from agencies.)