#PowellRemarks

Summary of Jerome Powell's Speech – April 16, 2025

Jerome Powell, the Chairman of the U.S. Federal Reserve, delivered an important speech at the Economic Club in Chicago, addressing the impact of new trade policies – particularly the tariffs imposed by former President Donald Trump – on the U.S. economy.

Key Points:

1. Impact of Tariffs on Inflation and Growth:

Powell warned that tariffs could lead to a significant increase in inflation.

He noted that these trade policies could cause a slowdown in economic growth, creating an environment similar to stagflation (stagnation + inflation).

2. Monetary Policy and Interest Rate Stabilization:

Powell confirmed that the Fed will keep interest rates as they are currently.

He explained that the central bank will wait before taking any new steps until the effects of the tariffs on the economy become clear.

3. Market Reactions:

Markets immediately declined after the speech; the S&P 500 index fell by 2.8%.

Treasury yields decreased and the U.S. dollar weakened.

Investors considered the speech to be "hawkish," especially with Powell's rejection of the idea of the Fed intervening to support the markets in case of a downturn.

4. Challenges Facing the Federal Reserve:

Powell emphasized that the Fed is struggling to strike a balance between the goal of reducing inflation and supporting employment.

Tariffs could hinder this balance and complicate monetary policy.