- Powell signals no rate changes until the economic outlook clears, citing high inflation and weak growth offsetting each other
- Aggressive tariffs and retaliation spark inflation and slow growth concerns, with Powell warning of persistent economic effects
- Two rate cuts remain possible for 2025, depending on inflation trends and economic stabilization
Today, Federal Reserve Chair Jerome Powell issued a public statement, addressing the unrelenting concerns by investors about the nation’s economy, following Donald Trump’s tariffs issued two days ago.
On April 2nd, President Trump signed a sweeping tariff plan, imposing a 10% base import duty on all goods entering the U.S., with additional tariffs ranging from 27% to 36% on select trading partners. Retaliatory measures from other nations, including China’s 34% tariff on U.S. goods, have further clouded the economic outlook.
On this subject, Powell shared his concerns with the American public. Earlier during the speech, he spoke about how uncertainty remains elevated, and how it will ultimately lead to higher inflation and slower economic growth. More on this story here.
Powell Addresses Interest Rates
Powell also addressed the Fed’s approach to interest rates amidst this economic turbulence. He stated that the central bank would “hold off on rate adjustments until the economic outlook becomes clearer.” With high inflation and weak growth offsetting each other, Powell emphasized the need for more data before making decisive moves.
Despite the current pause, Powell revealed that “two rate cuts remain on the table for 2025” if inflation trends ease and growth stabilizes. This cautious stance reflects the Fed’s commitment to balancing price stability with economic growth while navigating the uncertainties introduced by the tariffs.
Overall, the Federal Reserve Chairman seemed less alarmed than expected. Despite the fact that the aggressive tariff program and its incoming retaliation by trade partners led to one of the worst-performing periods in U.S. stock market history, Powell maintained a measured tone, signaling confidence in the Fed’s ability to adapt its policies as needed to stabilize the economy amidst these challenges.
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