The US Federal Bank (FED) President Jerome Powell said on April 4, 2025 that President Donald Trump’s new customs duties were “greater than expected, and that the economic impacts of this situation may show itself in the form of high inflation and slow growth.
Speaking at the conference organized by the Association of Business Addiction and Writing in Virginia, Arlington, Powell’s statements are as follows.
Fed President Powell stressed inflation risks
Powell, in a prepared speech at a business journalists conference in Virginia, emphasized that these policies have created an uncertain picture that can undermine the Fed’s 2 %inflation and maximum employment targets. While Trump has decreased in global markets on Wednesday since its taxes on Wednesday, Powell has not considered this wave of sales directly, but the FED has also faced the same uncertainties as investors and company executives.
Powell said that Trump’s import taxes lead to at least a temporary increase in inflation. However, he also drew attention to the risk that these effects may become more permanent. “Although taxes cause a temporary rise in inflation, there is a possibility that these effects are permanent, Pow Powell said, keeping long -term inflation expectations well fixed. He emphasized that the main task of the FED is to prevent one -time price increases from turning into an ongoing inflation problem.
Pressure on economic growth
Powell stated that customs duties could slow down economic growth and increase inflation, and that the Fed is facing a situation that forces the double mandate (inflation and employment). “Higher unemployment and higher inflation risks are increasing, Pow said Powell, making monetary policy decisions complicated by these contradictory risks. He added that developments, such as China’s 34 %retaliation taxes and limitation of critical minerals for the technology sector, may increase the likelihood of inflation becoming permanent.
Fed’s waiting approach
Powell said that the FED is time to wait for more data and that he would watch the clarity before making any adjustment in monetary policy. “Although uncertainty is high, it is now clear that tax increases will be greater than expected. Economic effects will probably be in the form of higher inflation and slower growth,” he said. He said that the FED would focus on keeping inflation expectations constant and did not plan to make a hasty change in his political stance.
The contradiction between hard and soft data
When evaluating the current situation in the economy, Powell pointed out the tension between “hard data” (for example, 228,000 jobs in March and 4.2 %unemployment rate) and “soft data” (Soft Data Surveys and Slows in Negotiations). Uz We are closely monitoring this tension. As new policies and economic impacts become clear, we will better understand their consequences on economic and monetary policy, ”he said. Powell said that the economy, which was seen at a “sweet point ile with low inflation and low unemployment a few weeks ago, is at risk of losing this balance in new taxes.
Conclusion
Powell said that commenting on the policies of the Trump administration is not the role of the FED, but they had to react to the effects of these policies on the economy. As the size of the taxes and the retaliation of other countries became clear, the Fed’s appropriate way for the monetary policy will become evident. As the decline and uncertainty in global markets continue, Powell’s statements show that the Fed will adopt a cautious approach and try to balance both inflation and growth risks.
