Fed’s Chair Jerome Powell has just kicked off the press conference, commenting on U.S. economic outlook, 2 days after Trump’s retaliatory tariffs unfolded.
The confrence takes places minutes after president Trump urged Powell via his post on Truth Social platform to ‘stop playing politics’ and cut interest rates, calling it a ‘perfect time’, citing lower inflation and upside jobs data surprise.
The highlights of the published, pre-prepared statement:
- Outlook is highly uncertain, with elevated risks of higher unemployment and higher inflation.
- It’s becoming clear that tariff increases will be significantly larger than expected. The same is true of economic effects.
- Data shows solid growth, labor market in balance. Progress toward 2% inflation goal has slowed.
- It’s too soon to say what will be the appropriate path for monetary policy.
Q&A session highlights:
- The Fed does not have a probability forecast of recession, but outside forecasts have raised that probability. Powell doesn’t comment on these recently elevated odds, aside from acknowledging very low, previous levels.
- It’s a good time to take a step back and let things clarify.
- It feels like we are not in hurry and feels like we have time.
- Powell fully intends serving his term.
In conclusion, Jerome Powell admitted on the bigger-than-expected scale of Trump’s protectionism, with tariffs possibly having a persistent inflation impact. The short-term inflationary pressure is to be expected, but more decisive shifts in the monetary policy need more clarity from economic data. The ‘we are not in hurry’ approach is very much in place.
US500 contract returned above 5200 mark, as Trump evoked Vietnam trying to ‘cutting their tariffs to zero’, sparking hope for eased protectionism. Source: xStation5
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