#PowellRemarks
Summary of Jerome Powell's Speech – April 16, 2025
Jerome Powell, the Chairman of the U.S. Federal Reserve, delivered an important speech at the Economic Club in Chicago, addressing the impact of new trade policies – particularly the tariffs imposed by former President Donald Trump – on the U.S. economy.
Key Points:
1. The impact of tariffs on inflation and growth:
Powell warned that tariffs could lead to a significant rise in inflation.
He noted that these trade policies could cause economic growth to slow down, creating an environment similar to stagflation (stagnation + inflation).
2. Monetary policy and interest rate stabilization:
Powell confirmed that the Fed will keep interest rates as they currently are.
He clarified that the central bank will wait before taking any new steps until the effects of the tariffs on the economy become clear.
3. Market reactions:
Markets immediately declined after the speech; the S&P 500 index fell by 2.8%.
Treasury yields dropped, and the U.S. dollar weakened.
Investors considered the speech "tilted toward hawkishness," especially with Powell's rejection of the idea of Fed intervention to support the markets in case of a downturn.
4. Challenges facing the Federal Reserve:
Powell emphasized that the Fed is struggling to achieve a balance between the goal of reducing inflation and supporting employment.
Tariffs could hinder this balance and complicate monetary policy further.