Powell Talks Tariff Impact Again, Emphasizes Labor Market Relies on Price Stability

Jinse reported that Federal Reserve Chairman Jerome Powell reiterated that the Fed will focus on preventing tariff-driven price increases from turning into more persistent inflation. "Our responsibility is to keep long-term inflation expectations firmly anchored and to ensure that a one-time price increase does not turn into a persistent inflation problem," Powell said in a prepared speech for the Economic Club of Chicago on Wednesday. He also noted that policymakers will balance their goals of promoting full employment and maintaining price stability, "keeping in mind that without price stability, we cannot create the long-term strong labor market conditions that benefit all Americans." This statement reinforces the signals Powell has emphasized multiple times, that Fed officials are not in a hurry to adjust the benchmark policy rate. He expressed similar sentiments shortly before, on April 4. Powell and other Fed policymakers have expressed support for keeping interest rates unchanged while waiting for clearer signals on how President Donald Trump's economic policies, particularly in trade, will affect the U.S. economy. Powell acknowledged that economic weakness and rising inflation could eventually create conflicts between the Fed's two goals. "We may find ourselves in a challenging situation where our dual mandate goals are in conflict," he said. "If that happens, we will consider the economic conditions and the distance between each goal, as well as the potentially different time dimensions needed to bridge these gaps."