🚨 Powell to Tariffs: You're Behind the Inflation Spike!
Following the Fed's recent rate cut to 3.50%-3.75%, Chair Jerome Powell pointed a finger directly at trade policy, not monetary policy, for current inflation woes.
Inflation High: Total and core PCE inflation hit 2.8%—still above the 2% target.
The Tariff Factor: Powell asserted that Trump-era tariffs are the primary driver of high goods inflation.
A Low 2% Reality: Excluding the effect of these tariffs, the inflation rate would be near the Fed's low 2% target.
Outlook: Services inflation is easing and the job market is solid. The Fed sees the tariff impact peaking next year and plans only one more rate cut in 2026.
The Bottom Line: Elevated tariffs are complicating the Fed's fight for price stability, placing inflation significantly higher than it otherwise would be.
