Federal Reserve Chair Jerome Powell has expressed concerns that Donald Trump's recently announced tariffs will significantly raise prices and hamper economic growth. Despite the current robustness of the US economy, Powell highlighted elevated uncertainty regarding future economic conditions, warning that the impact of the tariffs will be more extensive and pronounced than expected. Trump, having previously promised to lower prices, contradicted this as Powell echoed the predictions of economists about rising inflation. As a result, American consumers may face increased prices while the economy may experience slower growth amidst these tariff changes.
The tariffs unveiled by Trump this week were markedly more extensive than expected, and Powell warned the impact would likely be larger as a result.
While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent.
Downside risks have risen, and uncertainty remains elevated regarding the economic direction of the US economy.
Trump’s claim that prices are coming down is erroneous, as the tariffs are likely to lead to increased prices and slower economic growth.
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