Fed Chairman Jerome Powell issued a stark warning about the potential consequences of Trump's tariffs on the United States: "The level of tariff increases announced so far is significantly larger than expected," he said at an event at the Economic Club of Chicago. "Continued uncertainty about tariffs could cause lasting economic damage. With Trump's tariffs setting the economy on a path to weaker growth, higher unemployment, and faster inflation — all at the same time — the Fed is facing a situation that hasn't occurred in nearly half a century."
According to the Fed chairman, "we could be in a difficult scenario where our dual-term goals are up for debate. These are very radical policy changes, and there is no modern experience on how to deal with this." US stocks fell significantly during Powell's speech : the Dow Jones was down 700 points, or 1.7%. The broader S&P 500 index fell 2.5%. The Nasdaq Composite, the tech-heavy index, fell 3.5%, CNN reports.
“The Federal Reserve is tasked with promoting full employment and keeping inflation in check, but Trump’s tariffs threaten both of those goals,” Powell added. “For now, however, the U.S. economy remains in good shape, according to the latest data. The Fed’s best move right now is to hold off until the data clearly show how the U.S. economy is moving .”
“Jerome Powell just laid down the law for Trump,” David Russell, global head of market strategy at TradeStation, a major U.S. financial firm, told CNN. “It was a clear warning about stagflation and a statement that the Fed will not allow the White House to cut rates.”
(Online Union)
