Federal Reserve Chief Says Trump Tariffs Likely to Raise Inflation and Slow U.S. Economic Growth

TIME

The Trump administration’s expansive new tariffs will likely lead to higher inflation and slower growth, and the Federal Reserve will focus on keeping price increases temporary, Fed Chair Jerome Powell said Friday.

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00:00We have stressed that it will be very difficult

00:02to assess the likely economic effects of higher tariffs

00:05until there is greater certainty about the details,

00:08such as what will be tariffed, at what level,

00:10and for what duration, and the extent of any retaliation

00:14from our trading partners.

00:16While uncertainty remains elevated,

00:17it is now becoming clear

00:18that tariff increases will be significantly larger

00:21than expected, and the same is likely to be true

00:24of the economic effects,

00:26which will include higher inflation and slower growth.

00:28The size and duration of these effects remains uncertain.

00:34While tariffs are highly likely to generate

00:36at least a temporary rise in inflation, it is also possible

00:40that the effects could be more persistent.

00:42Avoiding that outcome would depend

00:44on keeping longer-term inflation expectations well anchored,

00:47on the size of the effects, and on how long it takes for them

00:49to pass through fully to prices.

00:52Our obligation is to keep longer-term inflation

00:55expectations well anchored and to make certain

00:58that a one-time increase

00:59in the price level does not become an ongoing

01:02inflation problem.

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