Powell: The impact of tariffs may be different this time, and what matters is long-term inflation expectations

Federal Reserve Chairperson Jerome Powell said on Friday that the costs of being cautious about monetary policy were "very, very low" for now, but he also said they could rise if inflation expectations came under pressure, and while the standard response to expectations of a one-time price increase from tariffs is to ignore it, this time it could be different. "If it [i.e. tariffs] becomes a series of events, and if the increase is bigger, that matters, and what really matters is what happens to long-term inflation expectations," Powell said. Powell also noted that the Fed has actually cut interest rates three times in 2019 in response to the Trump administration's first tariffs and the resulting slowdown, "which is the result of the growth and everything else that came out of these broad economic policy changes, not just the tariffs."