Federal Reserve Chair Issues Caution on Tariff Impacts

Federal Reserve Chair Jerome Powell has raised concerns over the Trump administration's tariffs, suggesting their economic impact might be more severe than previously thought. During a speech in Virginia, Powell emphasized the need for patience, stating it's "too soon" to alter the Fed's course as they continue to assess data and potential risks.

Inflation and Uncertainty Ahead

Powell highlighted that the tariff hikes are likely to drive inflation up in the near future. While short-term inflation expectations have seen an uptick, he reassured that longer-term expectations remain stable around the Fed's 2% target. The challenge, according to Powell, lies in ensuring temporary price shocks do not evolve into persistent inflation.

Assessing the Full Impact

The Fed Chair also pointed out the complexities in evaluating the tariffs' complete effects, citing uncertainties regarding affected goods, tariff levels, and potential retaliatory measures. "We are well positioned to wait for greater clarity before considering any adjustments to our policy stance," Powell concluded, underscoring the Fed's cautious approach.