Federal Reserve Warns of Inflation Spike from Trump’s Tariffs
By CHRISTOPHER RUGABER, Associated Press
WASHINGTON (AP) — Federal Reserve Chair Jerome Powell testified on Wednesday that President Donald Trump’s tariffs could lead to increased inflation in the upcoming months. During his ongoing testimony before Congress, Powell indicated that Americans would likely bear some of the financial burden from these import taxes.
While acknowledging that many Fed officials support interest rate cuts later this year, Powell emphasized the need for further data to understand the tariffs’ inflationary effects. "There will be some inflation from tariffs coming," he stated, noting that the duties could impose costs in the hundreds of billions annually.
Some Republican senators challenged Powell’s assertions. Senator Pete Ricketts suggested that tariffs might merely cause a one-time price spike rather than sustained inflation, while Senator Bernie Moreno accused Powell of political bias against the duties.
Despite these criticisms, Powell reiterated that most Fed officials favor a rate cut this year, though he conceded that the tariffs could have a limited impact on overall inflation levels. Currently, inflation has eased, with the consumer price index showing a modest increase of 2.4% compared to a year ago, but economists predict Trump’s tariffs may push inflation higher by year-end.
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