Wed, 16 Apr 2025

Wed, 16 Apr 2025 Tariffs will hit US economy and raise prices, Fed boss warns

Jerome Powell, chair of the Federal Reserve, said Donald Trump's new import taxes were larger than expected.
US Federal Reserve Chair Jerome Powell has warned that new tariffs on imported goods will likely lead to higher prices and slower economic growth. Powell stated that the recently announced import taxes by President Donald Trump were larger than expected, exceeding the bank's highest estimates. As a result, household and business sentiment on the economy has plummeted due to tariff concerns. The White House confirmed on Wednesday that tariffs could reach 245% when combined with existing levies on some Chinese goods. Powell noted that the economic impact of the new tariffs regime would include higher inflation and slower growth. He also highlighted the uncertainty surrounding the effects of Trump's trade policy, including changes to immigration, fiscal policy, and regulation. The US stock market suffered significant losses on Wednesday, with the Dow Jones falling 1.73%, S&P 500 down 2.24%, and Nasdaq plummeting 3.07%. The increase in interest rates on US government bonds has also raised concerns about investor confidence in the world's largest economy. Powell emphasized that despite the uncertainty and market volatility, the US economy remains solid. However, he noted that the Fed will wait for greater clarity before making any changes to its benchmark interest rate, which is currently set between 4.25% and 4.5%. The central bank has been criticized by Trump for holding rates unchanged. Powell stated that the Fed would consider how to balance rising inflation with a potential rise in unemployment if it becomes necessary. He also referenced Ferris Bueller's quote "life moves pretty fast" as a reminder of the need for flexibility and adaptability in navigating economic uncertainty.
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