#PowellRemarks
🚨 #PowellRemarks: Key Takeaways from Fed Chair’s April 16 Speech on Tariffs & Policy Outlook 📉🏦
1. Dual-Mandate Dilemma: Inflation vs. Growth**
Fed Chair Jerome Powell warned that Trump’s tariffs could force the Fed to choose between **fighting inflation** (currently at 2.6% PCE) and **supporting economic growth**, as tariffs may simultaneously **raise prices** and **slow GDP**—a scenario last seen during 1970s stagflation .
- **Data Dependence**: The Fed will wait for clearer economic signals before adjusting rates, citing "elevated uncertainty" .
2. Tariff Impact: Higher Prices, Weaker Demand**
- **Inflation Risk**: Tariffs are "highly likely" to cause at least a **temporary inflation spike**, with potential for **persistent effects** if expectations become unanchored .
- **Growth Slowdown**: Q1 GDP may show **near-zero growth**, partly due to businesses stockpiling imports ahead of tariffs .
3. Market Reaction & Fed’s Stance**
- **Stock Selloff**: Powell’s remarks triggered a **2.2% drop in the S&P 500** and a **3% Nasdaq plunge**, compounding losses from Nvidia’s China export woes .
- **No "Fed Put"**: Powell dismissed hopes of rate cuts to bail out markets, stating the Fed won’t intervene unless financial stability is at risk .
4. Internal Fed Divisions**
- **Dovish View (Waller)**: Supports rate cuts if growth slows sharply, even with elevated inflation .
- **Hawkish View (Kashkari)**: Prioritizes inflation control, resisting premature easing .
5. Key Quotes & Outlook**
- **Powell**: *"We may find ourselves in the challenging scenario where our dual-mandate goals are in tension"* .
- **Next Steps**: The Fed will monitor **May 7 policy meeting** for potential shifts, with markets pricing in **rate cuts by June** .
**🔍 Why It Matters**: Powell’s remarks underscore the Fed’s limited tools to address **stagflationary shocks**, putting pressure on fiscal policymakers to resolve trade tensions.
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