Powell sees tariffs raising inflation and says Fed will wait before further rate moves

cnbc.com:

Federal Reserve Chair Jerome Powell said Friday that he expects President Donald Trump's tariffs to raise inflation and lower growth, and indicated that the central bank won't move on interest rates until it gets a clearer picture on the ultimate impacts.

In a speech delivered before business journalists in Arlington, Va., Powell said the Fed faces a «highly uncertain outlook» because of the new reciprocal levies the president announced Wednesday.

Though he said the economy currently looks strong, he stressed the threat that tariffs pose and indicated that the Fed will be focused on keeping inflation in check.

«Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem,» Powell said in prepared remarks. «We are well positioned to wait for greater clarity before considering any adjustments to our policy stance. It is too soon to say what will be the appropriate path for monetary policy.»

The remarks came shortly after Trump called on Powell to «stop playing politics» and cut interest rates because inflation is down.

There's been a torrent of selling on Wall Street following the Trump announcement of 10% across-the-board tariffs, along with a menu of reciprocal charges that are much higher for many key trading partners.

Powell noted that the announced tariffs were «significantly larger than expected.»

«The same is likely to be true of the economic effects, which will include higher inflation and slower growth,» he said. «The size and duration of these effects remain uncertain.»

While Powell was circumspect about how the Fed will react to the changes, markets are pricing in an aggressive set of