Jerome Powell Warns of Inflation Pressures as Economic Growth Slows
Federal Reserve Chair Jerome Powell delivered a cautious message during his remarks at the Economic Club of Chicago, emphasizing that while the U.S. economy remains resilient, mounting risks could complicate the central bank’s efforts to maintain stable prices and full employment.
Powell reiterated the Fed’s commitment to its dual mandate, acknowledging that the labor market remains near full employment and inflation has cooled substantially from its peak. However, he noted that progress toward the 2% inflation target has stalled, and recent data suggest a moderation in growth.
The first quarter of 2025 showed a slowdown in economic activity compared to last year’s pace, according to current Fed data. Non-farm payrolls grew by an average of 150,000 per month, indicating softer job gains but still within a stable range. Wage growth is also moderating, continuing to outpace inflation slightly, while the labor market appears balanced and is no longer a major source of inflationary pressure.
At the same time, Powell highlighted concerns about rising inflation expectations, particularly in the near term. He warned that recent trade policies under the new administration—including a wave of tariffs—are expected to contribute to higher prices. “Some portion of these costs will inevitably be borne by consumers,” he said.
While long-term inflation expectations remain anchored, Powell admitted that the Fed may struggle to advance toward its goals in the coming year. “We’re likely to see a departure from steady progress on employment and inflation in 2025,” he cautioned, pointing to geopolitical uncertainty and policy shifts as key challenges ahead.
He echoed many of the themes from his early April remarks, placing particular emphasis on the unexpected scale of recently announced tariff hikes. According to him, the true inflationary impact of these trade measures remains unclear, and it’s too soon to determine whether the resulting price pressures will be short-lived or more entrenched.
Much of the uncertainty hinges on how severely the tariffs affect overall costs, the speed at which those costs feed into consumer prices, and whether long-term inflation expectations can remain steady despite the disruption.
Powell also reinforced the idea that maintaining stable prices is a prerequisite for lasting strength in the job market, underlining the Fed’s belief that inflation control is essential for sustainable employment gains.
Meanwhile, the central bank is weighing how best to navigate the growing economic risks tied to the administration’s aggressive trade stance. As conditions evolve, officials are reassessing how to prioritize the Fed’s twin goals of price stability and maximum employment.
The story is still developing and will be updated live…
Alexander Stefanov
Reporter at Coindoo
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over 8 years of experience covering the crypto, blockchain and fintech industries, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics.
