Fri Apr 04 17:31:02 UTC 2025: ## Powell Warns of Inflation and Slow Growth Amidst Trump’s Tariff Surge

**Washington D.C.** – Federal Reserve Chair Jerome Powell issued a stark warning Friday, predicting that President Trump’s sweeping new tariffs will likely fuel inflation and curb economic growth, potentially leading to higher unemployment. The announcement sent shockwaves through Wall Street, with the S&P 500 plummeting nearly 5%.

Powell stated that the tariff increases are “significantly larger than expected,” and their economic consequences will be correspondingly severe. He cited higher inflation and slower growth as inevitable outcomes, though he maintained that it’s premature to adjust US monetary policy. This comes despite President Trump’s repeated calls on social media for an immediate interest rate cut, accusing Powell of playing politics.

The new tariffs, significantly higher than initially anticipated, impose substantial burdens on key trading partners. China now faces a 54% levy, the EU will see a 20% tariff starting April 9th, and India faces a 26% tariff. A 25% tariff on non-US-made automobiles further exacerbates the situation.

While acknowledging the current market uncertainty, Powell expressed optimism that clarity will emerge within the next year, allowing for a clearer assessment of the tariffs’ impact. However, he indicated that the Fed is not currently inclined to lower its benchmark interest rate, which sits between 4.25% and 4.50%, as it continues to grapple with bringing inflation down to its 2% target. The Fed’s recent progress on this front has stalled, and the new tariffs threaten to complicate its efforts by impacting both inflation and unemployment.

Trump’s pressure on Powell to cut rates, delivered via a post on Truth Social, further underscores the political tensions surrounding the economic fallout. Trump insisted his tariff policy will remain unchanged despite market reactions. Powell, however, reaffirmed his commitment to serving his full term as Fed chair, dismissing Trump’s accusations. Financial markets currently estimate a two-thirds probability that the Fed will hold interest rates steady at its next meeting in May.

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