Federal Reserve Chair Jerome Powell blamed President Donald Trump's chaotic raft of tariffs for the slow progress of the central bank's fight against inflation on Wednesday.
Powell had little to share with reporters, as the Federal Open Market Committee declined to make any adjustments to interest rates following a two-day meeting in Washington, D.C. While defending the decision, Powell noted the "unusually elevated" uncertainty around the U.S. economy in the early months of Trump's presidency. Powell and the Fed have set a target of 2% inflation in 2025 but recent forecasts from the bank's analysts believe that goal is well out of reach.
“With the arrival of the tariff inflation, further progress may be delayed,” Powell said. "[The forecast] “doesn’t really show further downward progress on inflation this year, and that’s really due to the tariffs coming in."
Powell also noted that the tariffs make the Federal Reserve's attempts to track the root causes of inflation more difficult.
“It is going to be very difficult to have a precise assessment of how much of inflation is coming from tariffs and from other [places],” Powell said.
Inflation on household staples had cooled in February, per the Bureau of Labor Statistics, before Trump's plans for tariffs on Canada, Mexico and China spooked the market and members of his administration. Speaking to news outlets on Wednesday, Powell said that the fear in the markets is running ahead of the facts on the ground.
"We do understand that sentiment has fallen off pretty sharply but economic activity has not yet," Powell said. "The economy seems to be healthy."
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