U.S. Fed Chair Powell warns tariffs likely to push up inflation, cool growth

Fed Chair Powell warns of larger tariff increases, higher inflation, slower growth due to Trump's policies.

The recent tariffs introduced by President Donald Trump have increased the risk of higher unemployment and will likely cause inflation to rise and growth to slow, Federal Reserve Chair Jerome Powell said on Friday (April 4, 2025).

"It is now becoming clear that the tariff increases will be significantly larger than expected," Mr. Powell told an event in Virginia in prepared remarks.

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"The same is likely to be true of the economic effects, which will include higher inflation and slower growth," he said, adding that it was "too soon" to consider making changes to U.S. monetary policy.

His comments suggest the Fed is in no rush to cut its benchmark lending rate from its current elevated level of between 4.25 and 4.50%, as it continues its struggle to bring inflation down to its long-term 2% target.

Mr. Trump's announcement earlier this week of heavy levies against top trading partners has rocked global markets as investors have grappled with the prospect of significantly higher import costs on everything from shoes to shrimp.

But ahead of Powell's speech on Friday, Donald Trump took to his Truth Social account to insist that his policy would not change despite the market reaction, and called on Powell to act.