Fed chair: Tariffs likely to push inflation higher

Federal Reserve Chair Jerome Powell said that President Trump’s tariffs, being much steeper than expected, will likely have stronger-than-anticipated economic effects. Speaking in Chicago, Powell warned that the tariffs are expected to lead to higher inflation and slower economic growth.

“The level of the tariff increases announced so far is significantly larger than anticipated. The same is likely to be true of the economic effects, which will include higher inflation and slower growth. Both survey- and market-based measures of near-term inflation expectations have moved up significantly, with survey participants pointing to tariffs. Survey measures of longer-term inflation expectations, for the most part, appear to remain well anchored; market-based breakevens continue to run close to 2 percent.”

The chairman concluded his speech, “We understand that elevated levels of unemployment or inflation can be damaging and painful for communities, families, and businesses. We will continue to do everything we can to achieve our maximum-employment and price-stability goals.”