Jerome Powell, the Chair of the U.S. Federal Reserve, has expressed concerns that the tariff increases imposed by President Donald Trump will hinder progress in reducing inflation this year. However, Powell believes that the impact of tariffs on prices will be temporary and will move through the economy swiftly. He stated during a press conference after the Fed's decision to maintain interest rates that it is premature to determine if the Fed should overlook the inflationary effects of the tariffs. Powell acknowledged the difficulty in distinguishing how much of the price inflation in goods is a result of tariffs and how much stems from other factors.

While short-term inflation concerns are growing based on surveys of businesses and households, Powell noted that longer-term inflation expectations remain stable. He mentioned that the introduction of tariff-related inflation could delay the Fed's target annual inflation rate of 2%. President Trump has implemented various tariff increases on imports from countries like China, Canada, and Mexico, as well as on global steel and aluminum imports.

The impact of Trump's tariff policies on the economy remains uncertain, with the speed at which tariff-related inflation spreads and the maintenance of anchored inflation expectations being critical factors. Powell highlighted that recent inflation spikes may be linked to preemptive purchasing ahead of tariffs, and the Fed will monitor these effects. However, he emphasized that it is too early to observe significant effects of tariffs on economic data.