Fed Chair Jerome Powell Tells Congress to Brace for Substantial Price Increases Due to Tariffs
During a tense exchange with Representative Ritchie Torres on Capitol Hill, Federal Reserve Chair Jerome Powell issued a stark warning: the U.S. economy is likely headed for a substantial wave of price increases, largely due to newly imposed tariffs. The comments, made at a recent House Financial Services Committee hearing, mark one of the strongest signals yet that the Federal Reserve is delaying interest rate cuts over inflation concerns.
📈 “We Expect a Substantial Wave of Price Increases”
When Rep. Torres asked Powell how President Donald Trump’s new tariffs were affecting the Fed’s policy decisions, Powell responded bluntly:
“We do expect a fairly substantial wave of price increases to come through to the consumer and to measured inflation.”
Powell explained that while the exact magnitude and timing of the price increases remain uncertain, the threat of tariff-driven inflation is real and imminent. As a result, the central bank is not ready to begin cutting interest rates despite earlier forecasts of monetary easing in mid-2025.
💸 Tariffs Driving Consumer Prices Higher
Trump’s administration recently reimposed and expanded tariffs on imported steel, aluminum, and various Chinese goods, with some levies reaching 70%. Businesses have already begun passing those costs on to consumers, contributing to rising prices across sectors such as construction, electronics, and everyday goods.
Powell confirmed that the Fed is closely monitoring these price shifts, warning that inflation could rise again, even after showing signs of moderation in the spring.
🏦 Rate Cuts on Hold—for Now
Just weeks ago, the Fed had hinted at the possibility of two rate cuts by the end of 2025. Now, those cuts appear delayed or at risk as the central bank evaluates the impact of Trump’s aggressive trade policies.
“We need to be confident that inflation is moving sustainably toward our 2% target,” Powell said. “Tariffs have complicated that outlook.”
The Fed is expected to wait for more concrete inflation data from June and July before making its next move.
🗳️ Political Pressure and Fed Independence
Powell’s comments come amid growing political tension. Some Republicans, including President Trump, have accused him of being slow to act or even politically biased. Powell pushed back firmly, insisting that the Fed remains independent and is guided solely by economic data—not political agendas.
Meanwhile, Democrats like Ritchie Torres have warned that tariff-driven inflation could hit working families the hardest, especially if wages fail to keep pace with rising costs.
📌 Conclusion
As tariff hikes ripple through the U.S. economy, consumers can expect higher prices at the checkout line. With inflation risks back in the spotlight, the Federal Reserve is hitting pause on any near-term rate cuts. For now, Jerome Powell has made it clear: the road to lower interest rates runs straight through the storm of tariff-fueled inflation.
