Federal Reserve Chairman Jerome Powell warned that President Donald Trump’s across-the-board tariffs could cause a spike in inflation and curb economic growth.
Powell, who was nominated by Trump to lead the central bank in 2018, made the remarks on Friday at the Society for Advancing Business Editing and Writing conference.
“While uncertainty remains elevated, it is now becoming clear that tariff increases will be significantly larger than expected, and the same is likely to be true of the economic effects, which will include higher inflation and slower growth,” the Federal Reserve Chairman said in his prepared statement.
Powell noted that the size and duration of the tariffs remains unclear.
“While tariffs are highly likely to generate at least a temporary rise in inflation, it's also possible that the effects could be more persistent,” he added. “Avoiding that outcome would depend on keeping longer term inflation expectations well-anchored, on the size of the effects and on how long it takes for them to pass through fully to prices.”
Despite the uncertainty, Powell stressed that the economy is currently strong. On Friday, the Bureau of Labor Statistics released its report showing that the U.S. economy added 228,000 jobs, much higher than what had been expected.
Trump announced his “Liberation Day” tariffs on Wednesday, revealing a 10 percent baseline tariff on all countries, alongside additional taxes, including a 54 percent tariff on China, a 20 percent tariff on all imports from the European Union, 32 percent on Vietnam and a 24 percent tariff on Japan.
During his moderated discussion, Powell mentioned the risk of stagflation, which is when inflation rises alongside unemployment.
Just before Powell’s remarks, Trump said that the fed should slash interest rates.
“This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates,” Trump said on Truth Social said. “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!”
Trump had previously called for the Federal Reserve to keep interest rates low. Last month, the Federal Reserve elected to maintain current interest rates.
Trump’s continued intervention raises questions about whether he would dismiss Powell before the chairman’s current term expires in May of 2026. On Friday, Powell stressed that the Federal Reserve needs to remain nonpartisan.
“It's not that we're bipartisan,” he said. “We are non-political. We don't do that.”
