The “Big Money Show” panel describes Federal Reserve Chair Jerome Powell’s warning about the impact of tariffs on inflation.
Federal Reserve Chairman Jerome Powell said Wednesday that central banks could face a “challenging scenario” as they contest President Donald Trump’s tariffs.
Powell said the US trading partner obligations imposed by the White House were “significantly greater than expected” and likely led to a temporary increase in inflation.
“We may find ourselves in a challenging scenario where the goals of dual mandart are tense,” Powell said in preparation for the Chicago Economic Club. “If that happens, we consider how far the economy is from each target, and the potentially different time horizons that each gap is expected to close.”
Federal Reserve Chairman Jerome Powell will speak at a press conference in Washington, D.C. (Alex Wong / Getty Images / Getty Images)
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The Fed chair also said the central bank will wait for more data on the direction of the economy before changing interest rates.
“For the time being, we are well positioned to wait for more clarity before we consider adjusting to policy stance,” Powell said. His remarks point to the development of a potentially tough situation for the Fed, whereas growth and potentially jobs are weakening, while tariffs drive higher inflation.
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Powell said the outlook has become very uncertain and is a “basic change” in policies that do not provide businesses and economists with studying clear similarities.
However, in his first public remarks on recent financial volatility, Powell said he felt that bonds and stock markets were working well, and that fluctuations in security values indicate investors stock new landscapes.
Main Entrance to the Board of Directors of the Mariner S. Eccles, Washington, DC (Smith Collection/Gad/Getty Images/Getty Images)
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When asked if there is a “Fed Put” where the central bank intervenes if the market plummets, Powell said, “No, have an explanation… the market is handling what’s going on… the market is suffering from a lot of uncertainty, which means it’s working.
“Powell confirms that investors are worried. That’s the possibility of slowing economic growth and stubborn inflation as a result of tariffs. Essentially, he says it’s still a free situation.”
NASDAQ composites were the brunt of losses on Wednesday, falling more than 3%, with Tesla, Starbucks and Amazon among the biggest losers.
In Technology Stock, the S&P 500 fell by more than 2%, but consumer discretion and telecom stocks also fell.
The Dow Jones industrial average fell 699.57 points (1.7%), led by Amgen and Apple, with Chevron and travellers below selling. Energy stock recorded moderate profits as oil rose above $62 per barrel mark.
Reuters contributed to this report.
