Fed Chair Powell warns Trump’s unexpected tariffs could harm economic stability, driving inflation and volatility in markets.

Fed Chair Powell at @EconClubChi: “As that great Chicagoan Ferris Bueller once noted, “Life moves pretty fast.” For the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance.” pic.twitter.com/bYryQN1FmX

— CSPAN (@cspan) April 16, 2025

In Short

Jerome Powell assured that the American economy is strong but warned that President Trump’s tariffs could disrupt this stability and lead to higher inflation.

He noted that uncertainty from trade policies is causing market volatility and consumer anxiety about rising prices.

Federal Reserve Chair Jerome Powell addressed economic concerns during a speech at The Economic Club of Chicago.

He highlighted that the American economy remains robust, despite ongoing uncertainty and risks. However, he warned that President Trump’s significant tariffs may disrupt this stability.

Powell noted that the announced tariff increases are larger than expected, indicating potential for increased inflation and slower economic growth.

Market volatility

His comments came as Wall Street faced volatility, particularly in the tech sector, suggesting that market fluctuations stem from uncertain trade policies.

Powell acknowledged the challenge of making informed economic assessments given the unpredictable policy landscape.

He emphasised that uncertainty leads to market volatility, a sentiment echoed by industry leaders. The Fed chair pointed out the difficulty in balancing price stability and maximum employment as conflicting goals might arise from these conditions.

In response to anticipated price rises from tariffs, a recent poll indicated that 75% of adults expect increased costs for consumers. Economists suggest these expectations contributed to a surprising 1.4% rise in retail sales.