Link: https://www.bbc.com/news/articles/c77ndzy0m2vo
Jerome Powell, the chair of the federal reserve made a statement on US tariff policies. Different news organizations have had their spins on the speech. Some calling it aggressive and others saying it wasn’t aggressive enough.
Powell made statements on the import taxes recently announced by President Trump and stated that they were larger than expected. Surveys indicated a sharp decline in confidence among consumers coming off the heels of a global stock market turmoil.
Powell warned that these tariffs will lead to higher inflation and slower growth–both are effects our in class economic theories and discussion have led us to. All in all, it seems that effects are still highly uncertain but that the US economy remains in a solid position. And in true Powell fashion he said that the Fed will be waiting patiently before making any adjustments to rates.
In terms of how the President’s decision making power is related to the Federal Reserve, it is interesting seeing the independent dynamics play out. The Fed is an independent central bank whose decisions do not have to be approved by the president and the President has power over the Fed in terms of who they appoint to the Federal Reserve Board, subject to confirmation by the Senate. I am curious how potential political powers could affect the economic landscape moving forward and if there will be any “shows of force” that have seemed to be popular in these early months.
2 comments:
While it is still up in the air about what exactly will happen to our economy, I think that consumer expectations are a pretty good indicator. As theory suggests, if people think the market will go down it almost always will.
Fed Chair Jerome Powell warns that Trump’s new tariffs could raise prices and slow economic growth, adding uncertainty to an already shaky market. With both the Fed and the White House holding different powers, will political pressure end up shaping the Fed’s next move?
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