Overview

• Federal Reserve Chair Jerome Powell cautioned that President Trump's tariff policies are likely to cause inflation, with effects that could become persistent.
• Powell warned of stagflation risks, where rising prices and slowing economic growth could put the Fed's dual mandate of stable prices and maximum employment in conflict.
• Preliminary data suggests U.S. economic growth has slowed in the first quarter of 2025, with the Atlanta Fed forecasting a negative 2.2% GDP growth rate.
• Financial markets experienced significant volatility following Powell's remarks, with the Nasdaq Composite falling 3.4% and other indices showing losses.
• Trump’s inconsistent tariff measures, including sudden pauses and reversals, have deepened economic uncertainty and complicated policy responses for the Federal Reserve.