Jerome H. Powell, the Federal Reserve chair, has expressed concern that President Trump's trade tariffs could result in stagflation—a combination of rising inflation and slowing economic growth. In recent remarks, he outlined how the Fed would respond if its goals of a healthy labor market and stable inflation began to conflict. Fed officials are increasingly worried that tariffs will trigger persistent price increases, especially as consumer expectations of inflation rise. This uncertainty complicates economic forecasts and affects decisions on future interest rate adjustments.
Mr. Powell emphasized that the tariffs could contribute to stagflation, as inflation rises and economic growth slows, complicating the Fed's dual mandate.
He stated, 'If our dual-mandate goals are in tension, we would consider how far the economy is from each goal, and the respective time horizons.’
The uncertainty surrounding tariffs has distorted economic outlooks among officials, contributing to diverging opinions on the future of interest rate cuts.
Mr. Powell reiterated the Fed's duty to prevent a temporary price increase from evolving into an ongoing inflation issue.
Collection
[
|
...
]