Powell Indicates ‘Tariff Inflation’ Could Be Transitory in Recent Remarks
Fed Chair Jay Powell reintroduced the term “transitory” regarding inflation during his recent press conference. Key points include:
- The Fed's projections indicate interest rates may end 2025 at 50 basis points lower than previously expected.
- Markets reacted positively initially, with the S&P 500 and Nasdaq Composite rising by 1.1% and 1.4%, respectively, before reversing gains.
- New forecasts suggest slower economic growth, higher inflation, and increased unemployment compared to last year's predictions.
- Tariff-related inflation is viewed as potentially transitory, which may influence future interest rate adjustments.
- Underlying inflation was previously stable at around 2.5%, with 2% growth and 4% unemployment.