Fed's mouthpiece: Powell's non-aggressive stance on tariff inflation boosts the stock market

PANews reported on March 20th, according to Jinshi, that "Fed's mouthpiece" Nick Timiraos wrote that the Federal Reserve maintained the benchmark interest rate unchanged while assessing how a series of policy changes by the Trump administration in trade, immigration, expenditure and taxation might reshape economic prospects. In recent weeks, consumer confidence has plummeted amid headlines about federal government spending cuts and tariff increases.

Federal Reserve Chairman Powell said at a press conference on Wednesday: "We think now is a good time to wait for further clarity." Powell did not take a more aggressive stance on potential price increases related to tariffs, which cheered investors. The Dow closed up 0.9%, and both the S&P 500 index and Nasdaq rose more than 1%.

In addition, new economic forecasts show that among the FOMC's 19 decision-makers, 11 expect the Fed will cut rates at least twice this year - fewer than the 15 who expected such action last December. They also predict this year's inflation rate will rise from January's figure of 2.5% to reach 2.7%. Powell said: "This is actually due to impending tariffs; progress in reducing inflation 'may be temporarily delayed'."

Currently these predictions indicate officials believe price growth will slow down in years between2026-2027 meaning they see no reason for different interest rate settings compared with before implementing tariffs. Powell stated: “If inflation disappears quickly without us taking action then sometimes it may be appropriate to turn a blind eye towards inflation.Tariff-induced inflation could be one such case.”