WASHINGTON, D.C. — Two days after President Donald Trump announced sweeping new reciprocal tariffs on U.S. trading partners that caused financial markets to plummet worldwide, Federal Reserve Chair Jerome Powell said Friday the country’s economy will see higher inflation and slower growth in the short term.

What You Need To Know

  • Federal Reserve Chair Jerome Powell expects inflation to increase and the U.S. economy to slow following President Donald Trump's tariffs

  • He said the U.S. economy remains strong

  • The Fed remains committed to its 2% inflation target, Powell said

  • The tariffs Trump announced this week are creating uncertainty, he said

“While uncertainty is high and downside risks have risen, the economy is still in a good place,” Powell said, noting Friday’s U.S. Bureau of Labor Statistics report that 228,000 jobs were created in March. “Fast forward a year from now, the uncertainty should be much lower. The actual effects of the policies should be pretty manifest and clear. It’s a good time to take a step back and let things clarify.”

With the Trump administration in the process of implementing what he called “substantial policy changes” in trade, immigration, fiscal policy and regulation, he said, “Our monetary policy stance is well positioned to deal with the risks and uncertainties we face as we gain a better understanding of the policy changes and their likely effects on the economy.

“It is not our role to comment on those policies,” he said. “Rather, we make an assessment of their likely effects, observe the behavior of the economy and set monetary policy in a way that best achieves our dual mandate goals.”

Speaking at the Society for Advancing Business Editing and Writing conference in Washington, Powell reiterated the Fed’s congressionally mandated role of maintaining maximum employment and stable prices for the country. 

He acknowledged it will be very difficult to assess the likely economic effects of higher tariffs until there is greater certainty about the details, including what will be tariffed at what levels and for what duration, as well as the extent of any retaliation from U.S. trading partners. 

“While uncertainty remains elevated, it is now becoming clear that tariff increases will be significantly larger than expected, and the same is likely to be true of the economic effects," Powell said.

Powell said the Fed is seeking greater clarity before considering adjustments to its monetary policies but remains committed to returning inflation to its 2% target. 

“Progress toward our 2% inflation objective has slowed,” he said, noting that inflation is currently at 2.8%. “Longer-term inflation expectations, those beyond just the next few years, remain well anchored and consistent with our 2% target.” 

Minutes before Powell spoke Friday, Trump posted on Truth Social, "This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. He is always 'late,' but he could now change his image, and quickly. Energy prices are down, Interest Rates are down, Inflation is down, even Eggs are down 69%, and Jobs are UP, all within two months - A BIG WIN for America. CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!"