US Federal Reserve Chair Jerome Powell has warned that President Donald Trump‘s aggressive tariff policy is likely to drive up inflation and slow economic growth.
“The level of the tariff increases announced so far is significantly larger than anticipated,” Powell said at an event in Chicago on Wednesday. “The same is likely to be true of the economic effects, which will include higher inflation and slower growth.”
While the inflationary spike may be temporary, Powell cautioned that it could become more persistent depending on how the situation evolves.
“Our role is to make sure this will be a one-time increase in prices and not something that turns into an ongoing inflation process,” Powell said.
Powell’s remarks echo warnings this week from fellow Fed board member Christopher Waller, who has also flagged potential damage to the US economy from the trade policy.
The Fed’s next interest rate decision will be in May. Despite repeated pressure from President Donald Trump to cut rates, analysts broadly anticipate the central bank will leave the benchmark rate unchanged.
Markets have been rattled by Trump’s unpredictable trade schemes, which includes frequent tariff threats, reversals, and shifting targets, leading to volatility in global financial markets.