President Donald Trump’s imposition of tariffs has placed Federal Reserve Chair Jerome Powell in a difficult position. The tariffs are expected to increase inflation and slow U.S. economic growth, complicating the Fed’s efforts to maintain stability. Unlike previous instances where the Fed intervened to support markets, this time the central bank appears less inclined to rush to the rescue.
The Fed’s primary focus remains on controlling inflation, as emphasized by economist Kugler. Analysts suggest that the tariffs could lead to higher prices for consumers and businesses, further straining the economy. As a result, the Fed must carefully balance its response to ensure it does not exacerbate existing economic challenges.
— new from WSJ