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00:00At today's meeting, the committee decided to maintain the target range for the federal funds rate at four and a quarter to four and a half percent and to continue reducing the size of the balance sheet. The new administration is in the process of implementing substantial policy changes in four distinct areas trade, immigration, fiscal policy and regulation. The tariff increases announced so far have been significantly larger than anticipated. All of these policies are still evolving, however, and their effects on the economy remain highly uncertain as the economic conditions evolve. We will continue to determine the appropriate stance of monetary policy based on the incoming data, the outlook and the balance of risks. If the large increases in tariffs that have been announced or sustained, they're likely to generate a rise in inflation, a slowdown in economic growth and an increase in unemployment, the effects on inflation could be short lived. Reflecting a one time shift in the price level, it is also possible that the inflationary effects could instead be more persistent. Avoiding that outcome will depend on the size of the tariffs effect tariff effects on how long it takes for them to pass through fully into prices and ultimately on keeping longer term inflation expectations well anchored. Our obligation is to keep longer term inflation expectations well anchored and to prevent a one time increase in the price level from becoming an ongoing inflation problem.

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Tariffs Could Lead to Higher Inflation, Says Fed Chair Powell

Federal Reserve Chair Jerome Powell says tariffs could lead to higher inflation and unemployment. But he says those effects could be short-lived or more persistent. Powell spoke Wednesday at the conclusion of a two-day meeting in Washington. (Source: Bloomberg)