As expected, the Fed kept interest rates unchanged at 4.50% today. After this, the press conference of Fed Chair Jerome Powell began.
Here are the main points:
🔹 The economy remains 'strong,' reflecting the overall content of the Fed's statement.
🔹 The decline in Q1, according to Powell, was related to fluctuations in imports, making it difficult to accurately assess GDP.
🔹 Rate hikes this year could lead to price increases and reduce economic activity.
🔹 The Fed is unsure how trade policy will develop, but expects it to impact inflation and consumption.
🔹 Prices for goods are already rising, and according to Powell, this growth will continue in the summer.
🔹 Imports will affect retail prices, but with a time lag.
🔹 The most sensible decision right now is to stay at the current interest rate level.
🔹 'We will learn more about tariffs over the summer,' noted Powell.
🔹 'Someone has to pay for tariffs — and this will lead to price increases,' emphasized the Fed Chair.
🔹 He did not comment on whether he will remain on the board after his term ends in May.
🔹 He also declined to comment on the situation in the Middle East but confirmed that the Fed is monitoring it.
📉 Markets reacted negatively — there was no hint of a rate cut this year. On the contrary, Powell focused on tariffs that could increase inflationary pressure.