Tariffs Spark Uncertainty: Fed's Powell Warns of Inflation and Economic Impact

Federal Reserve Chair Jerome Powell cautioned that the new Trump administration tariffs could spur unexpected inflation and dampen U.S. economic growth. While Powell hints at steady interest rates, Trump's call for rate cuts complicates the Fed's strategy amid business uncertainty and global economic upheaval.

Federal Reserve Chair Jerome Powell has signaled that the Trump administration's newly unveiled tariffs could lead to higher-than-expected inflation and slower economic growth in the U.S.

Speaking at a conference, Powell emphasized the challenge the Federal Reserve faces due to the potential temporary and persistent inflationary effects of the tariffs. While Wall Street anticipates several interest rate cuts, Powell hinted at maintaining the current rate of around 4.3% to manage inflation while exercising caution as the full economic impact of the tariffs remains uncertain.

With businesses and consumers adopting a 'wait-and-see' approach, calls from President Trump for interest rate reductions add pressure to the Fed's balancing act of supporting employment and stabilizing prices.

(With inputs from agencies.)