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Watch Fed Chair Jerome Powell speak live on economy, policy views

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Federal Reserve Chair Jerome Powell is set to speak Monday to the National Association for Business Economists during the organization’s annual conference in Nashville.

The central bank chair is delivering his assessment on the economy as well as his policy views.

Following the speech, Powell will speak in a moderated discussion with Ellen Zentner, global head of thematic and macro investing at Morgan Stanley Wealth Management.

The speech comes less than two weeks after the rate-setting Federal Open Market Committee approved a half-percentage-point reduction in its key overnight borrowing rate, the first rate reduction in more than four years. Markets expect the Fed to follow up with additional cuts this year and in 2025 depending on the path of the economic data.

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Powell sees tariffs raising inflation and says Fed will wait before further rate moves

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US Federal Reserve Chair Jerome Powell holds a press conference after the Monetary Policy Committee meeting, at the Federal Reserve in Washington, DC on March 19, 2025. 

Roberto Schmidt | Afp | Getty Images

Federal Reserve Chair Jerome Powell said Friday that he expects President Donald Trump’s tariffs to raise inflation and lower growth, and indicated that the central bank won’t move on interest rates until it gets a clearer picture on the ultimate impacts.

In a speech delivered before business journalists in Arlington, Va., Powell said the Fed faces a “highly uncertain outlook” because of the new reciprocal levies the president announced Wednesday.

Though he said the economy currently looks strong, he stressed the threat that tariffs pose and indicated that the Fed will be focused on keeping inflation in check.

“Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem,” Powell said in prepared remarks. “We are well positioned to wait for greater clarity before considering any adjustments to our policy stance. It is too soon to say what will be the appropriate path for monetary policy.”

The remarks came shortly after Trump called on Powell to “stop playing politics” and cut interest rates because inflation is down.

There’s been a torrent of selling on Wall Street following the Trump announcement of 10% across-the-board tariffs, along with a menu of reciprocal charges that are much higher for many key trading partners.

Powell noted that the announced tariffs were “significantly larger than expected.”

“The same is likely to be true of the economic effects, which will include higher inflation and slower growth,” he said. “The size and duration of these effects remain uncertain.”

Focused on inflation

While Powell was circumspect about how the Fed will react to the changes, markets are pricing in an aggressive set of interest rate cuts starting in June, with a rising likelihood that the central bank will slice at least a full percentage point off its key borrowing rate by the end of the year, according to CME Group data.

However, the Fed is charged with keeping inflation anchored with full employment.

Powell stressed that meeting the inflation side of its mandate will require keeping inflation expectations in check, something that might not be easy to do with Trump lobbing tariffs at U.S. trading partners, some of whom already have announced retaliatory measures.

A greater focus on inflation also would be likely to deter the Fed from easing policy until it assesses what longer-term impact tariffs will have on prices. Typically, policymakers view tariffs as just a temporary rise in prices and not a fundamental inflation driver, but the broad nature of Trump’s move could change that perspective.

“While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent,” Powell said. “Avoiding that outcome would depend on keeping longer-term inflation expectations well anchored, on the size of the effects, and on how long it takes for them to pass through fully to prices.”

Core inflation ran at a 2.8% annual rate in February, part of a general moderating pattern that is nonetheless still well above the Fed’s 2% target.

In spite of the elevated anxiety over tariffs, Powell said the economy for now “is still in a good place,” with a solid labor market. However, he mentioned recent consumer surveys showing rising concerns about inflation and dimming expectations for future growth, pointing out that longer-term inflation expectations are still in line with the Fed’s objectives.

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Watch Fed Chair Jerome Powell speak live on interest rates and tariffs

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Federal Reserve Chairman Jerome Powell speaks Friday to the Society for Advancing Business Editing and Writing conference in Arlington, Va.

The central bank leader’s appearance, including prepared remarks and a question and answer session after, comes at a time of heightened market uncertainty regarding President Donald Trump’s aggressive tariffs against U.S. trading partners.

In March, the Fed voted to hold its benchmark interest rate steady while noting the issues over trade policy. Other Fed officials in recent days have expressed support for staying in a holding pattern until policy issues become clearer, though markets are pricing in four or five cuts this year.

Read more:
Federal Reserve is unlikely to rescue markets and economy from tariff turmoil anytime soon
Trump’s tariff gambit will raise the stakes for an economy already looking fragile
JPMorgan raises recession odds for this year to 60%

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Traders betting Fed will cut rates at least 4 times this year to bail out economy

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Traders work on the floor of the New York Stock Exchange during morning trading on April 03, 2025 in New York City. 

Michael M. Santiago | Getty Images

Traders are now betting the Federal Reserve will cut at least four times this year, amid fears Trump’s tariffs could tip the U.S. into a recession.

Odds of five quarter-point cuts coming this year jumped to 37.9%, up from 18.3% one day prior, according to data from the CME Group on Friday morning. That would put the federal funds rate to 3.00% to 3.25%, down from 4.25% to 4.50% where it has been since December.

Markets are also pricing in a roughly 32% chance the federal funds rate will fall to 3.25% to 3.50%, which would mean four quarter-point cuts from the Fed.

At the same time, the likelihood of a half-percentage point cut coming in June also jumped, to 43.8% from 15.9% previously.

The implied odds the Federal Reserve will cut aggressively rose, after Trump’s tariffs raised fears of a global trade war, and hurt economists’ forecasts for both growth and inflation. Investors are expecting that a slowdown in economic growth could spur the Fed to lower rates in a bid to avoid a recession.

However, many worry the Fed has a tough road ahead of them, as the central bank would have to cut rates in an environment where inflation has yet to go down to its 2% target. If implemented, the tariffs are expected to drive core inflation north of 3%, possibly even as high as 5% according to some forecasts.

On Friday, Roger W. Ferguson, economist and former Fed vice chair, told CNBC the Fed may not cut at all this year, saying the central bank has to worry about the inflation part of its mandate.

— CNBC’s Jeff Cox contributed to this report.

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