US Federal Chair Jerome Powell conducted a press conference this Wednesday following the Monetary Policy meeting. Powell expressed his concerns regarding the possible impact of Trump’s tariffs and the uncertainty surrounding the markets. He also mentioned how the Federal Reserve may find itself in a dilemma, whether to control inflation or support economic growth. If you are someone who wants to know more about what the US Federal Chair Jerome Powell said about the tariffs, this article is for you. It brings you everything you need to know about Powell and his concerns regarding inflation and slow economic growth.
What Did Jerome Powell Say In The Conference?
Jerome Powell delivered an already prepared speech in front of the Economic Club of Chicago, stating the Fed finds itself in a challenging scenario. The Chair mentioned how both of their dual-mandate goals are in tension. He also added that in case that happens, the Fed would consider how far the economy is from each goal. It will also consider the different time horizons over which those respective gaps would be anticipated to close. He also mentioned that the tariffs will possibly move them further away from their goals, probably for the balance of this year.
What Did Jerome Powell Say About The Interest Rates?
The Federal Reserve is the one that ensures prices are stable and there is full employment. In the current situation, the economists at the Fed see a threat to both because of the tariffs. Powell did not really mention anything specific about where the interest rates would head. However, he did mention that currently they are awaiting better clarity over the situation before they consider any adjustments to their current policies.
How Did The Markets React To Jerome Powell’s Address?
After Powell’s press conference, the markets witnessed a significant fall, and Treasury yields turned even lower. In case there is a growth in the inflation rates, the Fed will probably keep the rates stable or even increase them to decrease the demand. On the other hand, in case there is slow economic growth, the Fed might cut the interest rates further. The market is currently expecting that the Fed will probably start reducing the rates in the month of June. It also expects at least two or three quarter percentage point cuts till we approach the end of this year.
What Did Jerome Powell Say About A Possible Rise In Inflation?
Powell mentioned how the survey- and market-based measures of near-term inflation are currently on the rise. However, on the longer-term outlook, it remains close to the Fed’s 2% goal. The key inflation measures of the Fed will probably show a 2.6% increase in inflation for March. He also warned about how the impact of tariffs will most likely lead to a temporary rise in inflation. The effects of inflation may also become more persistent. According to him, the size of the effects, as well as the time it takes for them to pass through fully to prices, and keeping longer-term inflation expectations well anchored, is what will determine the outcome.
What Did Jerome Powell Say About The Threats To Economic Growth?
Gross domestic product of the first quarter, which is scheduled to come later this month, is expected to show only little growth in the US economy. According to what Jerome said, the data suggests that economic growth has definitely slowed down. The Commerce Department reported around 1.4% increase in retail sales this month. The reports suggest that a large section of the economic growth actually came from the car buyers who are trying to race against the impending impact of the tariffs. Strong imports ahead of the tariffs will definitely weigh down on the GDP as well. Powell still described the economy of the nation in a stable position even after the expected slowdown in economic growth.
