Chairman of the Federal Reserve Jerome Powell He expressed concern in Wednesday's speech that the central bank may be in the dilemma between inflation control and supporting economic growth.
With uncertainty increased as to the influence of the president Donald TrumpThe tariffs will have, the leader of the Central Bank said that although he expects higher inflation and lower growth, it is not clear where the Fed will have to devote greater focus.
“We can find ourselves in a difficult scenario in which our double goals are tense,” said Powell in prepared comments before the Chicago Economic Club. “If that happened, we would think about how far the economy is from every goal, and potentially different time horizons over which these appropriate gaps would be expected.”
The Fed is designed to ensure stable prices and full employment, and economists, including you in the Fed, see threats to both of the fees. Tariffs actually act as an import tax, although their direct relationship with inflation was historically uneven.
During the session of questions and answers after his speech, Powell said that the tariffs “will probably leave us from our goals … probably for the balance of this year.”
Powell did not indicate where he saw interest rates, but he noticed that “for now we are able to wait for greater transparency before considering any adaptation of our position of politics.”
Minimum session hit When Powell spoke, while the treasure's profitability became lower.
In the case of higher inflation, the FED would keep stable interest rates and even increase them to weaken demand. In the case of slower growth, the Fed may be convinced to lower interest rates. Powell emphasized the importance of maintaining inflation expectations under control.
Markets expect the Fed to start re -lowering the rates in June and introduce three or four points of the percentage point by the end of 2025, according to the CME Group Group group Fedwatch gauge.
FED officials generally consider tariffs to be a one -time hit for prices, but the expansive nature of Trump's duties can change this trend.
Powell noticed it surveys and market funds Short -term inflation is growing, although long -term prospects remain close to 2% of the fed target. He said that the key measure of the FED inflation shows a rate of 2.6% in March.
“Tariffs are very likely that at least a temporary increase in inflation,” said Powell. “Inflation effects can also be more durable. Avoiding this result will depend on the size of the effects, on how much time it takes them full transition to prices, and ultimately on maintaining longer inflation expectations.”
Speech was largely similar to one He provided at the beginning of this month in Virginia and literally some fragments.
Powell noticed threats of growth and inflation.
It is expected that the gross domestic product in the first quarter, which will be reported this month, shows a slight growth of the American economy in the period from January to March.
Indeed, Powell noticed: “The current data suggest that the growth has slowed down in the first quarter of last year's solid pace. Despite the strong sales of engine vehicles, it seems that general consumer expenditure has increased. In addition, strong imports in the first quarter, reflecting the attempts of enterprises to overtake potential tariffs.
Earlier on that day the Department of Trade informed Retail sales In March, he increased better than the expected 1.4%. The report showed that a large part of the growth came from car buyers who want to make purchases before tariffs, although many other sectors also showed solid profits.
After the report of Atlanta, Fed said that GDP is growing at a rate of -0.1% in Q1 when adapting with an unusual increase in import and exports of gold. Powell described the economy as a “solid position”, even with the expected slowdown in growth.
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