- Fed Chair Jerome Powell said inflation is unlikely to make further progress this year due in part to Trump’s tariffs.
- He added that the Fed’s inflation forecast is rising primarily due to uncertainty with Trump’s policies.
- Powell’s comments followed the Fed’s decision to hold interest rates steady on Wednesday.
The head of the nation’s central bank said President Donald Trump’s trade policies are set to delay further progress on bringing inflation down.
After the Federal Open Market Committee announced on Wednesday that it is holding interest rates steady for the second time this year, Federal Reserve Chair Jerome Powell told reporters during a press conference that Trump’s tariff plans present significant uncertainty for the economy going forward.
When asked about the FOMC’s economic projections for the rest of the year — which showed higher inflation than the previous forecast in December — Powell said that “a good part of it is coming from tariffs.”
“I do think with the arrival of the tariff inflation, further progress may be delayed,” Powell said. He added that the FOMC’s Summary of Economic Projections “doesn’t really show further downward progress on inflation this year, and that’s really due to the tariffs coming in.”
The latest consumer price index data found that inflation increased 2.8% year-over-year in February, inching toward the Fed’s 2% inflation target.
Since taking office, Trump has proposed and implemented a range of tariff policies. He most recently put a 25% tariff on steel and aluminum imports into effect, and he’s delayed other tariff announcements on goods from key trading partners, including Canada and Mexico.
Trump has previously acknowledged that Americans would feel “some pain” as a result of his trade policies but has overall maintained that his plans would benefit Americans in the long run. Powell said during his press conference that tariffs “tend to bring growth down, they tend to bring inflation up.”
The median FOMC member still projected two interest-rate cuts for 2025, unchanged from its projections in December. Powell noted that economic uncertainty, largely caused by Trump’s tariff plans, could very well change those forecasts.
Powell acknowledged the poor consumer sentiment among Americans, particularly regarding high grocery prices, saying that it “probably has to do with turmoil at the beginning of an administration that’s making big changes in policy.”
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