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Jerome Powell, president of the US Federal Reserve, says Tariffs are pressurizing the expectations of inflation and a “good part” of high inflation forecasts with tariffs.
Jerome Powell says inflation is higher than a target of 2% and tariffs were responsible for running the expectations of inflation.
US Fed Meeting: To keep the interest rates unchanged for the second consecutive time, US Fed officials on Wednesday revised 2.5% to 2.8% for 2025 inflation approaches and cut the GDP projection for the year from 2.1% to 1.7%, pointing to “stagflation”. As CNBCJerome Powell, president of the US Federal Reserve, said that tariffs are pressurizing the expectations of inflation and a “good part” of high inflation forecasts is to be done with tariffs.
He said, “Some close-term measures of inflation expectations have recently progressed.
“Some of these, answers are clearly some of it, a good part of it, coming from tariff,” he said. “But, we will work with other forecasts to separate non-tariff inflation (from) tariff inflation.”
He also said that the fed was getting “close and close” for stability, but tariffs could prolong the process, as stated by CNBC“I think with the advent of tariff inflation, further progress may be delayed,” Powell said.
Given further, the new administration is in the process of implementing important policy changes in four separate areas: business, immigration, fiscal policy and deragulation. He said that this is the net influence of these policies which matters to the economy and for the path of monetary policy.
Briefing reporters after the US Fed -rate decision, Powell said, “The US Fed decided to leave the policy interest rate unchanged after reviewing the economic activity. The inflation increases against the target of 2%… and tariffs were responsible for running the expectations of inflation.”
Right now, hard data has been very solid, although survey data has shown significant increase in uncertainty and concerns about negative risks. However, the relationship between survey data and economic data has not always been very tight, Powell said.
US Fed Meeting March 2025: Key takeaways
The US Federal Reserve kept its major interest rates unchanged for the second consecutive day for the second consecutive day to the market expectations.
With voting power, all 12 Fed officials voted in favor of the decision to keep the interest rates stable on Wednesday.
In his policy statement, the authorities accepted a high level of economic uncertainty these days, it stems a lot of trump with shock therapy.
Fed officials indicated that they could still cut rates by the end of this year, as if they were forecasting at the end of last year.
Officials estimated a weak growth for the US economy for 2025, which is estimated before 2.1%.
The US Fed officials also saw high inflation, which were higher than before and the inflation launch from 2.5% to 2.8% for 2025.
It is afraid of what “stagflation” is called, where the economy is stabilized, but inflation remains more.
Fed said that it would start the monthly cut of its treve of Treasury starting in April. This means that it will allow up to $ 5 billion on its massive trading to mature each month below the east cap of $ 25 billion.
By reinstalling more in the treasury every month, the Fed will essentially help to keep long -term yields low, which will be otherwise.
Fed Chair Jerome Powell said that this step was more technical than the signal about the change in policy. He said that this was the result of “looking at some signs of increased tightness in money markets”.
US market influence
Despite such a warning, the stock still increased, as low treasury yields in the bond market reduced some pressure. The yield on a 10 -year Treasury fell from 4.31% to 4.25% just before the Fed announced its decision.
