During a press conference following the decision to keep interest rates unchanged, Jerome Powell emphasized that inflation in goods has slightly accelerated and is expected to persist through the summer, as it takes time for tariffs to affect final consumers.
“Goods being sold now may have been imported months ago, before the tariffs were imposed,” he noted. The expectation is to see more effects in the coming months, with “price increases already observed, for example, in computers, attributed to tariffs.”
The Federal Reserve thus considers that inflation may accelerate in the summer, with newly released economic projections already indicating a revision of the inflation rate from 2.7% to 3% this year.
Powell acknowledged that the “transmission of tariffs to inflation is a complete process,” affecting the manufacturing chain, exporter, importer, and consumer, with each potentially feeling the impact of customs duties.
“Someone has to pay for the tariffs, and it will be someone in that chain,” with it being almost certain that the final consumer will experience effects.
Nonetheless, “the process is difficult to predict,” given the lack of recent precedent, making it necessary to “remain humble about the ability to forecast.”
The central bank president further highlighted that uncertainty remains high, particularly regarding the extent and duration of the tariffs’ effects on inflation and the economy.
