Washington – The Federal Reserve can be patient and wait to see how the tariffs and other economic policies of the Trump administration end Before making any change in interest rates, President Jerome Powell said Wednesday.
“At the moment, we are well positioned to expect greater clarity” on the impact of policy changes in areas such as immigrationtaxes, regulation and dutyPowell said.
Acute volatility in Financial markets Since President Donald Trump announced radical tariffs on April 2, only to put most of them Waiting to week laterIt has led to speculate whether the Fed would soon reduce its key interest rate or take other measures to calm investors. However, it is unlikely that the Fed intervenes unless there is a collapse in the treasure stock market or other malfunction, economists say.
In written comments that will be delivered to the Chicago Economic Club, Powell reiterated that Trump administration tariffs are “significantly larger than expected.”
“The same is likely to be true for economic effects, which will include greater inflation and slower growth,” he said.
Powell said inflation will probably be temporary, but “it could also be more persistent,” echoes a concern expressed by the majority of the interest rate committee of the 19 members of the Fed in The minutes of your meeting last month.
However, some divisions have emerged between the Fed Interest Tax Committee saying That he hopes that the impact of even a great increase in tariffs will be temporary, even if they are left in place for several years. At the same time, he also expects such great duties to weigh on the economy and even threaten a recession.
If the economy slowly slows down, even if inflation remained high, Waller said it would support to reduce interest rates “before and to a greater extent than I had thought earlier.”
But other Fed officials, including Neel Kashkari, president of the Fed Minneapolis branch, have said that they are more focused on combating the effects of the highest rates on inflation, which suggests that they are less likely to support rates cuts in the short term.
For now, the most recent reports suggest that the economy is solid. The hiring has been solid and inflation cooled in March. However, consumer confidence and business measures have collapsed, which raises concerns among economists that business spending and investment could weaken.
