Federal Reserve Chairman Jerome Powell expressed uncertainty on Friday about the effects President Donald Trump’s reciprocal tariffs would have on the economy.
Trump announced reciprocal tariffs to address import duties and what he called “horrendous imbalances” in trade with foreign countries Wednesday during a Rose Garden event. Powell noted that the Trump administration was changing multiple areas of policy at an event held by the Society for Advancing Business Editing and Writing (SABEW) in Virginia.
“The new administration is in the process of implementing substantial policy changes in four distinct areas: Trade, immigration, fiscal policy and regulation,” Powell said during prepared remarks. “Our monetary policy stance is well positioned to deal with the risks and uncertainties we face as we gain a better understanding of the policy changes and their likely effects on the economy.”
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“It is not our role to comment on those policies,” Powell continued. “Rather, we make an assessment of their likely effects, observe the behavior of the economy and set monetary policy in a way that best achieves our dual mandate goals.”
In an executive order signed Wednesday that imposed the tariffs, Trump cited multiple industries he wanted to see return to America, including pharmaceuticals, shipbuilding, automobiles and machine tools. Powell predicted a short-term increase in inflation due to the tariffs.
“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,” Powell said. “Avoiding that outcome would depend on keeping longer-term inflation expectations well anchored, on the size of the effects, and on how long it takes for them to pass through fully to prices.”
Trump urged Powell to cut interest rates in a post on Truth Social.
“This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. He is always ‘late,’ but he could now change his image, and quickly,” Trump posted. “Energy prices are down, Interest Rates are down, Inflation is down, even Eggs are down 69%, and Jobs are UP, all within two months – A BIG WIN for America. CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!”
Previously, Trump urged investment in the United States in another post on Truth Social.
“TO THE MANY INVESTORS COMING INTO THE UNITED STATES AND INVESTING MASSIVE AMOUNTS OF MONEY, MY POLICIES WILL NEVER CHANGE,” Trump posted. “THIS IS A GREAT TIME TO GET RICH, RICHER THAN EVER BEFORE!!!”
The president said that Vietnamese leaders were inclined to cut a deal to avoid the imposition of tariffs.
“Just had a very productive call with To Lam, General Secretary of the Communist Party of Vietnam, who told me that Vietnam wants to cut their Tariffs down to ZERO if they are able to make an agreement with the U.S.,” Trump posted. “I thanked him on behalf of our Country, and said I look forward to a meeting in the near future.”
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