The president of the Federal Reserve (Fed), Jerome Powell, warned this Friday that the tariffs imposed by the administration of President Donald Trump could result in slower economic growth and a persistent inflationary surge in the United States.
During a conference in Arlington, Virginia, Powell stated that the impact of the new tariffs, which will take effect on Saturday, could be more long-lasting than expected. “It is very likely that the tariffs will cause, at least temporarily, an increase in inflation, but it is also possible that their effects will be more persistent,” warned the central bank president, according to EFE.
The comments from the Fed chief came just two days after Trump announced a global tariff of 10% on imports from 184 countries, as well as additional levies reaching up to 34% for Chinese products and 20% for certain goods from the European Union. The president justified the measure as part of a day he described as “the day of liberation.”
Powell insisted that the organization's goal is to keep long-term inflation expectations well anchored. "Our obligation is to ensure that a temporary increase in the price level does not become a persistent inflationary problem," he said.
The head of the Fed was more straightforward than usual, emphasizing that tariffs are "higher than people generally expected" and that the uncertainty generated by these trade policies "will remain high."
Still, she assured that the Federal Reserve is "well positioned" to manage the risks associated with the trade war, although she indicated that they will wait for greater clarity before considering changes in interest rates.
Currently, interest rates remain in the range of 4.25% to 4.5%, and the Fed anticipates two cuts throughout 2025, provided conditions allow for it.
While Powell was delivering his speech, Trump used his social media platform Truth Social to pressure the central bank and demand an immediate cut in interest rates. “This would be the PERFECT time,” he wrote, claiming that inflation has decreased, employment has increased, and even egg prices have dropped by 69%.
Powell, however, was cautious: “It is premature to predict what the appropriate monetary policy will be. The economy can zig when you expected it to zag,” he concluded.
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