Federal Reserve chair Powell predicts tariffs will spike inflation and slow economic growth

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Federal Reserve Chairman Jerome Powell warned that President Donald Trump’s across-the-board tariffs could cause a spike in inflation and curb economic growth.

Powell made the remarks at the Society for Advancing Business Editing and Writing conference. Trump has in the past criticized the chairman, whom Trump nominated to lead the central bank in 2018 and whom former president Joe Biden re-nominated in 2022.

“While uncertainty remains elevated, it is now becoming clear that tariff increases will be significantly larger than expected, and the same is likely to be true of the economic effects, which will include higher inflation and slower growth,” the Federal Reserve Chairman said in his prepared remarks.

Trump announced his “Liberation Day” tariffs on Wednesday, wherein he announced a 10 percent baseline tariff on all countries, alongside additional tariffs such as a 54 percent tariff on China, a 20 percent tariff on all imports from the European Union, 32 percent on Vietnam and a 24 percent tariff on Japan.

“While tariffs are highly likely to generate at least a temporary rise in inflation, it’s also possible that the effects could be more persistent,” he added. “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.”

During his moderated discussion, he mentioned the risk of stagflation, which is when inflation rises alongside unemployment.

Just before Powell’s remarks, Trump said that Powell should slash interest rates.

“This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates,” Trump said on Truth Social said. “He is always ‘late,’ but he could now change his image, and quickly. 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!”

Powell refrained from commenting on Trump’s comments that he had inherited a poor economy.