Shifting blame from consumer spending, Fed Chair Jerome Powell attributes U.S. inflation primarily to import tariffs. This insight arrives as global economies dissect American trade policies’ far-reaching consequences.
Powell’s analysis pins high inflation on goods prices inflated by tariffs, while services see relief. Rates remain at 3.5-3.75% post-FOMC, apt amid supra-2% inflation.
Tariff shocks are mostly absorbed, functioning as one-time hits that will fade, per Powell. Stable expectations match Fed’s 2% aim, with core PCE 3.0%, headline 2.9%.
Tracking ahead, the Fed anticipates goods inflation peaking then dropping without added tariffs. No rigid schedule governs policy; adaptability rules. Economy thrives on consumption and business spends, housing a weak spot.
Demand inflation would pose greater challenges, Powell underscored. U.S.-India trade ties amplify effects on chains, prices, investments—tariffs deemed transient by central banks barring anchored shift.