Fed Chair Jerome Powell Says Tariffs Will Likely Lead to Inflation, As Trump Calls On Him to Cut Rates

Speaking in Virginia, Powell did not sound like he was eager to quickly move to cutting interest rates, while warning of coming effects from the president’s new tariff policy.

Jerome Powell

Sha Hanting/China News Service/VCG/ASSOCIATED PRESS

Minutes after President Donald Trump called on him to cut interest rates, Federal Reserve Chair Jerome Powell warned that the president’s tariffs are likely to raise inflation, escalating tension between the White House and the central bank.

“We face a highly uncertain outlook with elevated risks of both higher unemployment and higher inflation,” Powell said at the Society for Advancing Business Editing and Writing conference in Arlington, Virginia. “While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent.”

Trump’s tariffs announced this week are sharper and higher than many economists anticipated and have resulted in a widespread market sell-off. Economists at JP Morgan ticked up the chances of a global recession to 60% if the tariffs remain, and markets have tumbled — particularly after China issued retaliatory tariffs against the United States.