#PowellRemarks
Federal Reserve Chair Jerome Powell delivered significant remarks on Friday, April 4, 2025, addressing the economic implications of President Trump's recently announced tariffs. Powell plainly stated that these tariffs are expected to increase inflation and slow economic growth.
"While uncertainty remains elevated, it is now becoming clear that the tariff increases will be significantly larger than expected," Powell noted in his prepared remarks. "The same is likely to be true of the economic effects, which will include higher inflation and slower growth".
Despite these concerns, Powell indicated the Federal Reserve will maintain its current interest rate policy while monitoring the situation. "We are well equipped to wait for more clarity before we contemplate any changes to our policy approach". He emphasized that it's "premature to determine the appropriate direction for monetary policy".
Powell expressed particular concern about the persistence of inflation resulting from these tariffs, stating, "While tariffs are highly likely to generate at least a temporary rise in inflation, it's also possible the effects will be more persistent". He stressed that the Fed's priority is preventing a temporary surge in prices from evolving into a persistent inflation problem.
Despite the economic uncertainty, Powell maintained that the economy is "still in a good place" with solid growth and a labor market in balance. However, he acknowledged that surveys show dimming expectations and higher uncertainty among households and businesses, particularly regarding trade policies.
This cautious approach comes as markets are already predicting aggressive interest rate cuts later this year, with some forecasts suggesting the Fed could reduce rates by at least one full percentage point by year's end.
