Federal Reserve Chair Jerome Powell predicted "significantly larger" inflation and slower economic growth due to President Donald Trump's tariffs.
"The level of tariff increases announced so far is significantly larger than anticipated, and the same is likely to be true of the economic effects, which will include higher inflation and slower growth," Powell told the Economic Club of Chicago on Wednesday. "Both survey and market-based measures of near-term inflation expectations have moved up significantly, with survey participants pointing to tariffs."
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"Tariffs are highly likely to generate at least a temporary rise in inflation," he warned. "Inflationary effects could also be more persistent.
"Avoiding that outcome will depend on the size of the effects, on how long it takes for them to pass through fully to prices, and ultimately, on keeping longer-term inflation expectations well anchored."
