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Powell Warns Trump's Tariffs Could Trigger Inflation and Slow Growth

The Federal Reserve holds interest rates steady as it assesses the economic uncertainty stemming from the administration's escalating and variable tariff policies.

U.S. Federal Reserve Chair Jerome Powell attends a press conference, following a two-day meeting of the Federal Open Market Committee on interest rate policy, in Washington, D.C., U.S., March 19, 2025. REUTERS/Nathan Howard/File Photo
Fed chair Jerome Powell speaks during an event at the University Of Chicago Booth School Of Business last month. Photo: Yuki Iwamura/Bloomberg via Getty Images
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Overview

  • Federal Reserve Chair Jerome Powell highlighted the likelihood of tariffs temporarily increasing inflation while slowing U.S. economic growth, potentially creating stagflation-like conditions.
  • Powell criticized the Trump administration's tariff regime as being more extensive and unpredictable than initially expected, intensifying its economic impact.
  • The Federal Reserve has adopted a cautious 'wait-and-see' approach, keeping its benchmark interest rate unchanged until the tariff effects become clearer.
  • Economic indicators reveal slowing growth, with modest consumer spending and a surge in pre-tariff imports expected to weigh on GDP estimates.
  • Investor anxiety has surged following Powell's remarks, leading to declines in major stock indices, falling bond yields, and a weakening U.S. dollar.