Fed Chair Powell Says Impact of Tariffs Are 'Significantly Larger Than Expected' As Trump Calls Him To Cut Rates

Federal Reserve Chair Jerome Powell said on Friday that the impact of President Donald Trump's tariffs on the economy and inflation are "significantly larger than expected," but warned it's too soon to decide whether to cut interest rates as a result. Trump, in turn, accused him of "playing politics" and urged him to implement a cut.

Speaking in Virginia, Powell said that the tariffs are "highly likely" to result in an "at least temporary rise in inflation," and warned that it is possible that their effects "could be more persistent," rather than a one-time shock.

"Our obligation is to... make certain that a one-time increase in the price level does not become an ongoing inflation problem," Powell said. He added during the press conference that "it feels like we don't need to be in a hurry" to change rates.

Trump gave a different assessment, saying "This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates." "He is always "late," but he could now change his image, and quickly. Energy prices are down, Interest Rates are down, Inflation is down, even Eggs are down 69%, and Jobs are UP, all within two months - A BIG WIN for America. CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!" Trump claimed in a publication on his social media platform, Truth Social.

Earlier on Friday, Trump shared a TikTok video from a user claiming he was "purposely crashing the market" to get the Federal Reserve to lower interest rates. Stock indexes indeed continue to plunge during the session, with the S&P 500 dropping by more than 4% after cratering 4.8% on Thursday. The tech-heavy Nasdaq 100 falls by almost 4% after dropping 6% the day before.