Jerome Powell doubles the word that has haunted him, saying that the pain from the tariff would be ‘transient’
After leaving interest rates intact Due to the uncertainty over tariff and trade, the president of the federal reserves of Jerome Powell has revived the word with the controversial past: transient. During his post-adultery press conference On Wednesday, Powell said that inflation caused by a tariff could be “transient” or temporary.
“I think this is a kind of basic case,” he said, emphasizing that the central bank may not really know that the tariff of total influence will have an economy.
Still, the last time Powell called the transient inflation was during the early days of pandemic and was wrong. The inflation has become hotter and hot, and consumer prices have reached four decades high. The central bank was repeatedly criticized because they don’t behave fast enough. At one point, Powell himself said that it was time to withdraw the term after it became clear that the rapid increase in price was not disappearing.
During a press conference on Wednesday, Powell said that the Fed was well aware of what had happened to the inflation of the pandemic era, but the situation is different because the tariffs could be a one -time shock for the prices that are resolved. Recent Secretary of Treasury Scott Beesent said“I hope that the failed team crossing could come back together and think that nothing is more transparent than the tariff,” as Fed Policy comments.
But Powell’s recognition did not prevent economists from digging old memories.
“I would think that, especially after a big mistake in politics earlier this decade, the statement of all current uncertainty, some officials of the Fed will show greater humility,” Mohamed El-Erian, President of Queens’ College at the University of Cambridge, wrote on X. “It is simply too early to say with any regression of confidence that the inflationary effects will be transient, especially since companies and households still have fresh in their mind, a recent history of high unexpected inflation.” El-Erian was a vocal critic of the Fed.
Ignoring past decisions, it could still reach the threat of the waiting and watching of the central bank. After all, President Donald Trump’s tariff policy is constantly changing.
“The risk is that the tariffs could have a longer effect on inflation if additional tariffs were added later this year, or if the tariffs pushed inflation expectations and expectations of wages,” said Apollo Torsten Economist Wealth in a statement e -ašte.
But others understand the attitude of the Fed and believe that there is a chance that Powell could be correct this time.
“Inflation caused by a tariff is likely to be more transparent than not, but it is impossible to know with any confidence,” Moody’s chief economist Mark Zandi said Wealth Ue -Student. “The key to how transient or not to be inflation caused by a tariff is inflation expectations.”
The higher expectations of inflation are already on the rise due to tariffs, Zandi explained. If that trend continues, inflation with tariff fuel will be more persistent and force the central bank to keep the interest rates longer.
“But since there is no way to find out, the appropriate response of the Fed is to sit on his hands, keep the rates unchanged and wait for the trade war and his outburst to see,” Zandi said.
Trump has a different proposal for a central bank: he reduced interest rates now. The Fed would be better than reducing interest rates, while the tariffs pass in the economy to facilitate the transition, he wrote on his social media platform the truth social after the Fed decision to keep the rates unchanged. Trump wants lower interest rates to keep his promise to Americans to overthrow the borrowing costs. Nothing Powell said on Wednesday said he was ready to reduce interest rates.
This story is originally shown on Fortune.com
