Fed predicts tariffs will cause more inflation and slower growth

Federal Reserve Chairman Jerome Powell explained that the tariffs introduced by President Donald Trump increased the risk of higher unemployment and will likely cause higher inflation and slower growth at home.

"It is now becoming clear that the tariff increases will be significantly larger than expected" Powell argued at an event in Virginia, in a written statement.

"While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent," he said. He also indicated that it is too early to consider changes in monetary policy.

His comments suggest that the Fed is in no rush to cut its benchmark interest rate from its current elevated level of 4.25% to 4.50%, as it continues its efforts to bring inflation down to its long-term target of 2%.

Meanwhile, President Trump insists that Powell should consider cutting interest rates. In addition, the Republican argued that inflation is down and employment is up.

"This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. He is always “late,” but he could now change his image, and quickly. Energy prices are down, Interest Rates are down, Inflation is down, even Eggs are down 69%, and Jobs are UP, all within two months - A BIG WIN for America. CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!" said Trump on Truth Social.