The president of the United States Federal Reserve (FED), Jerome Powell, said on Wednesday, April 16 that the data available to the agency at the moment suggest that last year’s solid growth has slowed down in the first quarter of 2025, in a context marked by the commercial war opened by President Donald Trump.
At the start of an intervention carried out in the Chicago Economic Club, Powell said that, “despite the growing uncertainty and downward risks,” the US economy still maintains solidity.
However, he indicated that provisional data show weak growth in the first three months of the year and that the strong growth of imports, a reflection of the attempt of the companies in anticipating the application of tariffs, is expected to “hurt the growth” of the gross domestic product (GDP).
Powell said that “the surveys conducted with households and companies reveal a marked setback of trust and high uncertainty”, which reflects concerns about government’s trade erratic political political.
Regarding the government’s commercial policy, the economist stressed that the tariff loads imposed are “significantly” greater than expected and that, therefore, “the same is likely to happen with the economic effects, which will include greater inflation and slower growth.”
“As we better understand policy changes, we will better understand its implications for the economy and, therefore, for monetary policy. It is very likely that tariffs generate, at least temporarily, an increase in inflation,” said Powell, who considered that we will have to wait “for more clarity before considering any adjustment to our position in monetary policy.”
The presiding agency has frozen its flexibility rhythm with respect to the final stretch of 2024, when, together, it cut interest rates at a percentage point. Powell has insisted in the last weeks that it is necessary that inflation, which stood at 2.4% in March (above the objective of the Fed of 2%), shows a more consistent slowing to continue lowering the rates, which are currently located in a fork between 4.25% and 4.5%.