Key dealers
- Customs are likely to lead to higher inflation and slower economic growth.
- The Federal Reserve monitors tulle effects but remains careful with changes in monetary policy.
Fed chairman Jerome Powell said today that Trump’s recently announced customs duties is higher than expected and these Measures are likely to lead to higher inflation and slower economic growth. He repeated that the central bank does not rush into some Policy moves and will wait for more clarity.
“Although the uncertainty remains increased, it is now clear that the customs searches will be significantly greater than expected. The same is probably true for the economic effects, which will include higher inflation and slower growth,” said Powell in its prepared comments at society to promote business editing and writing’s annual conference.
Powell at the US Economy and noted that the economy remains ”in a Good Location ”with solid growth, a balanced labor market and inflation that runs above the FED’s goal of 2%. But he warned that all new federal customs increases could complicate the way forward for monetary policy.
“Higher customs will work through our economy and are likely to increase inflation in the coming quarters,” Powell said.
Trump administration announced on Wednesday a swipe new tariff Politics, impressive At least 10% duties on all foreign imports, with higher fees on goods from countries that drive large trade surplus with the United States. Economists warns that new The trade regime can push efficient tariffs well over 25%and log inflation while weighing growth.
The Fed President stated that the Central Bank’s response to this development would depend on several Factors, including The tariffs, their duration and potential retaliation from trading partner.
“We are well positioned to wait for major clarity before considering some Adjustments to our political attitude, “he said.” That is too soon To say what will be Suitable path for monetary policy. “
Friday’s comments come after recently released data showed that inflation is still being hot. Core PCE prices-Fed’s preferred inflation meter-step 2.8% compared to the year before in February.
Powell acknowledged that progress against the FED’s inflation target of 2% has subsided and that the effects of the customs walks could aggravate inflation in the coming quarters.
Powell still emphasized that inflation expectations remain “well rooted” and said that the Fed will work to ensure that a temporary shock from customs does not turn into a lasting inflation problem.
