Jerome Powell says the Fed won’t make progress on its goals this year if Trump’s tariffs stay

Chairman Jerome Powell warned Wednesday that the Federal Reserve would not meet its targets this year if Donald Trump's tariffs remain unchanged. Powell said directly, “We will not see further development towards our goals,” if tariffs remain at the current levels.

He spoke at a press briefing after the Fed wrapped up the May policy meeting in Washington, where officials voted to hold interest rates between 4.25% and 4.5%.

That is the same level they have hidden since the last cutting rate in December. The middle bank is now stuck watching a slow economy while inflation is still threatening to rise.

According to the Federal Open Market committee, the risks tied to both unemployment and inflation have increased. Powell told reporters that the Fed was waiting for further information before making the next move, especially with the uncertainty that still hangs on the White House trade policy. “There are many uncertainty about the scale, scale, timing and persistence of tariffs,” Powell Says.

He added that because of this, the Fed does not cut preemptively rates. “This is not a situation where we can be preemptive, because we do not know what the right data responses are until we see more data,” Powell said.

Powell says the Fed will wait before I -cut the rates

When asked if the Fed puts more weight in inflation or unemployment today, Powell did not give a straight answer. “It's too early to know that,” he said. He also said that the current fed position was “moderate restriction,” and there was no need to rush. “We think we can be patient,” Powell added. “It leaves us in a nice place to wait and see.”

But he also warned that if Trump's tariffs stay in place, Fed's work could be stalled for at least a year. “We're not going to advance to those goals – again, if that's the way the tariffs are shaped,” Powell said.

He explained that the twin mandates of the Central Bank – stable price and high work – could be both affected. “The risks of higher inflation, higher unemployment have increased,” he said.

Powell is clear about the stakes. If these tariffs are left like, the Fed timeline may be delayed for rate adjustments properly by 2026.

This means that Americans can be able to stuck with high borrowing costs than expected. The Fed is not confident that the economy can completely rebound to the current trading policy in the area.

Powell warns tariffs can push inflation and grow

Powell also warned that Trump's trade approach could break the brakes in the economy. “If the huge increase of tariffs announced is preserved, they are likely to develop inflation, a slowing economic growth, and increasing unemployment,” Powell said.

The Fed chair explained that the effects of inflation may be once a jump-but they may also last, depending on how the market reacts. “It is also possible that inflationary effects can be more patient,” he said.

Even with all that risk, Powell said the Fed still believes that the current stance is strong enough to respond if necessary. “We believe that the current stance of financial policy leaves us properly to respond in a timely manner in the potential economic development,” Powell said.

The comments of the Fed chair came after a week of mix -mixing economic signals. April's payrolls showed some growth, but the latest GDP report showed a weaker than the expected numbers.

Powell said the Fed had to see how Trump's policy decisions were playing before it re -adjust the rates. Fed doesn't guess. They want proof – real data, not hypotheticals.

He also made it clear that there is no playbook for the next. Tariffs can be raised. They can be expanded. Or they can stay locked for another year. And that's exactly why Fed is holding. Powell said, “We don't think we need to hurry.” But if there is no change in the White House trade, the hands of the central bank will remain tied.

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