Overview
- Federal Reserve Chair Jerome Powell stated that President Trump's tariffs are significantly larger than anticipated, likely causing higher inflation and slower economic growth.
- Powell emphasized the potential for a conflict between the Fed's dual mandate of price stability and maximum employment, describing it as a 'challenging scenario.'
- The Fed will hold off on interest rate changes while assessing the long-term economic effects of the tariffs, prioritizing clarity over immediate action.
- U.S. financial markets experienced steep declines following Powell's remarks, with the Nasdaq Composite down 3.4% and other major indices seeing significant losses.
- Powell underscored the uncertainty created by the fluctuating tariff policies, comparing their scale to historic trade disruptions like the Smoot-Hawley Tariff Act of 1930.