The head of the US Federal Reserve Fed, Jerome Powell, assumes that President Donald Trump’s new customs package will lead to higher inflation and slower growth.
“Even if the uncertainty is still great, it is now clear that the customs increases will be significantly larger than expected, and the same is probably also true for the economic effects,” said Powell. This included a higher inflation rate and slower growth. “The scope and duration of this effects remain uncertain.”
While the tariffs would most likely cause at least a temporary increase in inflation, it is also possible that the effects are more permanent, the Fed chief warned. The FED is working on the fact that “a one -time increase in the price level does not become a continuing inflation problem”. You have to see what that for them Monetary policy mean. The next interest rate decision by the central bank of the largest economy in the world is due in May.
Trump reacted to Powell’s statements on his online language tube Truth. This would be a “perfect time” for Powell to reduce interest, he wrote. This is always late, “but now he could change his image, and quickly”. In capital letters he added: “Lower interest rates, Jerome, and stop playing politics!” Trump is a critic of the FED leader and an advocate of low interest rates.
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Washington (dpa-Afx)