With the tariff policy of the president of United States, Donald Trumpinjecting uncertainty with the economic perspectives, the chair of the Federal Reserve, Jerome Powell, He will speak on Wednesday (16) for the second time in less than two weeks.
Powell will present his opinion on what is reserved for Americans in terms of Inflation and Employmentand what the Central Bank can do if they deviate from the course.
The Fed Chair last spoke on April 4, when it was proved to be an intermediate period – two days after Trump’s announcement of a 10% tariff over most US imports and heavy additional rates on dozens of commercial partners, and five days before Trump abruptly suspend “reciprocal” rates, except for China for 90 days.
At that fleeting moment, Powell had already evaluated that tariffs would probably mean a challenging higher inflation combination and slower growth, potentially forcing the Fed to choose against what to fight.
Still, he essentially expressed an approach to waiting to see, saying that “it is too early to say what the appropriate way to monetary policy will be.”
How much Trump’s temporary retreat-and the extent of the uncertainty that accompanies him-will make Powell go beyond that, if it will do so, it will be the center of investors’ attention, which have been hit for days by greater volatility in global markets since the beginning of the Covid-19 pandemic five years ago.
Powell will speak at 2:30 pm GMT at the Economic Club of Chicago and will also answer questions from a moderator.
To complicate your communication challenge, there is more news about tariffs. After Trump exempted some electronic tariff products for now, his government has also started investigations that should result in new rates on pharmaceuticals and semiconductor chips.
This week, Fed Christopher Waller director said that if Trump continues to reduce tariffs to a lower level, the US Central Bank will do well to keep the interest rate unchanged in the first half of this year and perhaps cut it gradually in the second semester as inflation raised by tariffs decreases.
If Trump maintains rates, Waller said, the unemployment rate may increase and the Fed will need to make more aggressive cuts.
Other Fed authorities have been more “Hawkish”, focusing on signs that short-term inflation expectations have increased and could, as st. Louis’s Fed President Alberto Musalem said, “infiltrating” long-term expectations, potentially forcing the Fed to keep interest rates or even increased them even more.
It is unclear which point of view is closer to Powell’s perception, or with what details he can articulate his opinion. Meanwhile, recent data show that inflation is slowing down, while the job market is staying firm, even with the economy losing boost.
