Jerome Powell did not shy away from the impact of President Trump’s tariffs during a highly anticipated press conference Wednesday.
The Federal Reserve chairman said in no uncertain terms that Trump’s trade agenda would be likely to drive up prices, even amid considerable uncertainty about exactly how much — and whether the price changes would be “transitory.”
In just one example Wednesday afternoon during a question about price stability, Powell said that inflation had previously neared the Fed’s key goal but now “I do think with the arrival of the tariff inflation, further progress may be delayed.”
Read more: What Trump’s tariffs mean for the economy and your wallet
It was just one of numerous comments from the central banker that contrasted with past meetings where he often declined to weigh in on the topic in detail.
The remarks from Powell came after the Fed on Wednesday decided to hold interest rates steady and maintained a prediction of two rate cuts later this year.
What the central bank did change was its outlook on inflation (higher) and economic growth (lower). And those upward inflation adjustments, Powell said, are “really due to the tariffs coming in.”
Some analysts raised questions about the Fed’s unchanged overall prediction of two cuts this year even as Trump’s trade policy has roiled markets and cut back projections of economic growth for the remainder of the year.
“We continue to think that Fed officials are underestimating the extent to which tariffs are likely to push up inflation,” Capitol Economics said in a note immediately after Wednesday’s decision but before the press conference.
Trump has already levied new duties on China, Canada, and Mexico, as well as on steel and aluminum in his first months in office, with a key deadline on April 2 threatening reciprocal tariffs that could be historic in their breadth and scope.
At other points in his press conference Wednesday, Powell also repeatedly said that the exact effects of tariffs on prices were uncertain, may never be exactly known, and could even be temporary.
He called the price effects of tariffs potentially “transitory” — reusing a much-scrutinized word that was deployed by the Fed and other economic officials in 2021 as prices started to rise during Joe Biden’s presidency.
Powell then called a transitory effect on prices “kind of the base case but we really can’t know that” as he maintained the Fed’s long-held wait-and-see approach to actually responding to Trump’s still unfolding economic agenda.
