(WASHINGTON) — Federal Reserve Chair Jerome Powell said Friday he expects President Donald Trump’s tariff policy will hike prices and slow economic growth, while noting that key indicators “still show a solid economy.”
Policy changes implemented by the White House have contributed to a “highly uncertain outlook,” Powell said, making the remarks as stocks plummeted amid an escalating global trade war.
Despite the murky outlook, Powell said Trump’s tariffs would likely increase consumer prices.
“While tariffs are highly likely to generate at least a temporary rise in inflation, it’s also possible the effects will be more persistent,” Powell told the audience at the Society for Advancing Business Editing and Writing conference in Washington, D.C.
Minutes before Powell was set to speak, Trump sharply criticized the Fed chair, calling on him to reduce interest rates.
“This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates,” Trump said in a post on Truth Social.
Trump also claimed without evidence that political considerations have played a role in Powell’s decision-making on interest-rate policy.
On Friday, Powell declined to directly respond to Trump. Still, Powell strongly rebuked concern about his political independence.
“I don’t respond to political remarks,” Powell said, adding that it would be inappropriate for the central bank to comment on U.S. trade policy.
“We try to stay as far as we can from the political process,” Powell said. “That’s what people expect from us.”
The remarks from Powell came about two weeks after the Fed opted to hold interest rates steady, even as the central bank said it expected higher inflation and slower economic growth than it had forecast in December.
Despite escalating trade tensions and market turbulence since Trump took office in January, the economy remains in solid shape by several key measures.
The unemployment rate stands at a historically low level. Meanwhile, inflation sits well below a peak attained in 2022, though price increases register nearly a percentage point higher than the Fed’s goal of 2%.
A new jobs report on Friday showed a surge in hiring last month, exceeding economists’ expectations and defying growing concern on Wall Street of a possible recession.
The U.S. added 228,000 jobs in March, according to data from the U.S. Bureau of Labor Statistics. That figure marked a major increase from 151,000 jobs added in the previous month.
Still, the backward-looking report about the labor market failed to assuage investor fears in the aftermath of sweeping tariffs issued by Trump earlier this week.
On Friday, the Dow Jones Industrial Average plummeted 1,600 points, or 4%, while the S&P 500 plunged 4.5%. The tech-heavy Nasdaq declined 4.6%.
The selloff extended losses from Thursday, which marked the worst trading day since 2020.
Addressing the conference in Washington, D.C, on Friday, Powell said it remains too early to determine how the Trump administration’s policy changes will impact forthcoming interest-rate decisions.
For now, Powell said, it is “too soon to say what will be the appropriate path for monetary policy.”
This is a developing story. Please check back for updates.
Copyright © 2025, ABC Audio. All rights reserved.