Federal Reserve Chair Jerome Powell stated that President Trump's tariffs contribute to a "highly uncertain" economic environment, affecting the Fed's decision-making regarding interest rates. While the Fed maintains a wait-and-see approach, economic indicators like low employment and wage growth suggest stability. However, Powell emphasized unpredictability regarding potential consumer price increases due to tariffs, stating that inflation levels may fluctuate. He reaffirmed the Fed's position on interest rates, highlighting that forecasts predict meaningful inflation increases this year, thus justifying a more conservative approach compared to European central banks.
We do expect to show tariff inflation to show up more... But I want to be honest, we really don't know how much of that's going to be passed through to the consumers.
The reason we're not [cutting rates faster] is the forecast... all professional forecasters that I know of, on the outside and the Fed, do expect a meaningful increase in inflation over the course of this year.
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