Fed Chief warns Trump’s tariffs could stoke inflation, hurt growth
- Donald Trump’s tariffs are expected to raise prices and constrain growth, according to Jerome Powell.
- Powell warned that tariffs could create tension between the Fed’s goals of stable prices and employment.
- US markets fell after Powell’s remarks, with the Nasdaq Composite down 3.4%.
Donald Trump’s tariffs will likely push up prices and constrain growth, and could put the US Federal Reserve in the unenviable position of having to choose between tackling inflation and unemployment, the bank’s chair said Wednesday.
“Tariffs are highly likely to generate at least a temporary rise in inflation,” Fed chair Jerome Powell told the Economic Club of Chicago warning that the inflationary effects “could also be more persistent”.
“Avoiding that outcome will depend on the size of the effects, on how long it takes for them to pass through fully to prices, and, ultimately, on keeping longer-term inflation expectations well anchored,” he added, echoing similar remarks earlier this month.
