On April 16, 2025, Federal Reserve Chair Jerome Powell delivered his remarks at the Economic Club of Chicago, highlighting the economic impact of President Donald Trump's tariff policies. Powell warned that tariffs larger than expected could lead to temporary inflation that could potentially become more persistent, as well as slow down economic growth.
Powell emphasized that this situation could challenge The Fed's dual mandate to maintain price stability and maximize employment. If inflation and unemployment rise simultaneously, The Fed would face a dilemma in determining interest rate policy.
Nevertheless, Powell stated that The Fed would wait for further clarity before making interest rate adjustments, given the increased market volatility since the announcement of tariffs in early April.
Powell's statement highlights the challenges of monetary policy amid global trade uncertainty.
