Federal Reserve Chairman Jerome Powell warned Friday that Trump’s strict tariffs will worsen inflation and lower economic growth. As a result, the Fed won’t change interest rates until the full economic effect is clarified.
In prepared remarks, Powell said, “It is now becoming clear that the tariff increases will be significantly larger than expected. The same is likely to be true of the economic effects, which will include higher inflation and slower growth.”
He added, “Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem.”
Powell’s Arlington, remarks came at the Society for Advancing Business Editing and Writing Annual Conference.
Powell said that while uncertainty is high and “downside risks have risen,” the economy is still in a good place.
As the Fed chair was warned of the negative effect of high tariffs, markets worldwide continued a free fall, with the Dow losing 1 738 points early Friday afternoon. That’s on top of a 1 679 point drop Thursday.
The huge tariffs, imposed in what President Donald Trump celebrated in the White House Rose Garden on Wednesday as “liberation day”, immediately created huge market damage not only for the Dow but also the S&P 500. (UPI)
