Federal Reserve Chair Jerome Powell warned on Wednesday that the impact of United States President Donald Trump's tariffs could cause the central bank to shift its focus from the goals it previously outlined for 2025, particularly concerning the balance sheet.
Speaking at the Economic Club of Chicago, Powell admitted that the reciprocal duties on various countries and the levies on different sectors, such as the automobile, have been higher than the Fed predicted. He reiterated that the measures could lead to a rise in inflation and uncertainty regarding the outlook in that aspect.
Powell went on to warn about other counter-effects, such as a supply chain issue in the automobile industry and an increase in unemployment. He stated the central banks are now "in a difficult place" and said the Fed could face a "difficult judgment" if its mandates come into conflict.
