Powell Says Fed Can Wait to Adjust Rates, Sees Tariff Risks: The Fed Decides

Federal Reserve Chair Jerome Powell said officials are not in a hurry to adjust interest rates, adding tariffs could lead to higher inflation and unemployment.

“If the large increases in tariffs that have been announced are sustained, they’re likely to generate a rise in inflation, a slowdown in economic growth and an increase in unemployment,” Powell said Wednesday at the conclusion of a two-day meeting in Washington.

“The effects on inflation could be short lived, reflecting a one time shift in the price level,” he said. But it’s “also possible that the inflationary effects could instead be more persistent.”

Officials voted unanimously to keep the benchmark federal funds rate in a range of 4.25% to 4.5%, where it has been since December. In a statement, policymakers said they see a growing risk of both higher inflation and rising unemployment.

“Uncertainty about the economic outlook has increased further,” the Federal Open Market Committee said in a statement. They added, “the risks of higher unemployment and higher inflation have risen.”

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