Fed Chair Powell Warns Trump Tariffs Could Fuel Inflation, Impacting Consumer Prices

Federal Reserve Chair Jerome Powell highlighted the inflationary risks posed by former President Donald Trump's trade policies during the central bank's latest policy meeting. The Fed maintained interest rates at 4.25%-4.5% while signaling two potential rate cuts in 2025, but Powell emphasized data-dependent flexibility.

Tariffs are already permeating the economy, with businesses passing costs to consumers. "We're beginning to see some effects," Powell stated, noting rising short-term inflation expectations in both market data and surveys. Respondents consistently identified tariffs as the primary driver.

The full inflationary impact remains delayed due to supply chain dynamics. Powell cautioned that distribution channels take time to reflect tariff costs, suggesting sustained price pressures ahead. While longer-term expectations still align with the Fed's 2% target, near-term measures show concerning upward momentum.