Powell shows that tariffs can create a bilateral policy for the Fed

Chairman of the Federal Reserve System Jerom Powell He expressed concern in the speech on Wednesday that the Central Bank could be in the dilemma between inflation control and economic growth.

With uncertainty raised over what influence the president Donald TrumpThe Central Bank leader will have tariffs, stated that when he expects higher inflation and decline, it is unclear where the Fed will have to devote great attention.

“We can be in a complex scenario in which our goals with a double mandate are in the tension,” Powell said in the prepared remarks before Chicago’s economic club. “If this happened, we would have considered how far the economy is from each goal, and potentially different temporary horizons, which will be assumed that these gaps would be closed.”

The Fed is instructed to ensure stable prices and full employment, and economists, including those in the Fed, see threats to both of them. Tariffs essentially act as import tax, although their direct connection with inflation has historically been spotty.

At the questions and answers after Powell’s speech said the tariffs are probably giving us away from our goals … Probably to the balance this year. “

Powell did not give any instructions on where he sees, headed by interest rates, but noted that “as long as we can expect greater clarity before considering any adjustments to our political position.”

Stocks fall to the session minimum When Powell said, while the Treasury gives the entry below.

In the case of more inflation, the Fed will support interest rates stable and even increase them to weaken demand. In case of slow growth, the Fed can make sure that interest rates are reduced. Powell emphasized the importance for maintaining inflation expectations.

Markets are waiting Fedwatch caliber.

Fed representatives tend to consider tariffs with a one -time blow at prices, but the broad nature of Trump’s duties can change this trend.

Powell noted this Interviewed and market action The upcoming inflation increases, although the long -term forecast remains close to 2% of the Fed. The Fed Inflation key is expected to be 2.6% in March, he said.

“The tariffs are likely to create at least temporary inflation,” Powell said. “Inflation effects can also be more persistent. The avoidance of this results will depend on the size of the effects, on how much time it takes to go through the prices, and, ultimately, the preservation of long -term inflation expectations is well secured.”

The speech was largely similar to one He delivered earlier this month In Virginia, and in some excerpts.

Powell noted growth threats as well as inflation.

It is expected that the gross domestic product for the first quarter, which is reported at the end of this month, will show a slight increase in the US economy during the January period.

Indeed, Powell noted: “Data in the hands still indicate that the growth has slowed in the first quarter from last year’s solid pace. Despite the high sales of road vehicles, the total consumer expenses have grown modestly.

Earlier this day the Department of Trade reported this retail sales In March, 1.4%increased than expected. The report shows that most of the growth came from car buyers who seek to make purchases ahead of the tariffs, although several other sectors also showed solid profits.

After the Fed report in Atlanta, she said that when adjusting the unusual growth of gold and export of 1 Q1 in Q1, which grows by -0.1%. Powell described the economy as a “firm position” even with the expected slowdown.

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