Ankara: US Federal Reserve (Fed) Chair Jerome Powell warned on Wednesday that if the recently announced large tariff increases are sustained, they will likely result in an increase in inflation, a slowing of economic growth, and an increase in unemployment.

According to Anadolu Agency, Powell addressed these concerns in a press briefing following the FOMC's policy rate decision. He emphasized that the evolving economic conditions will guide the Fed's monetary policy decisions, taking into account incoming data, the economic outlook, and the balance of risks.

Powell highlighted that the announced tariff increases have been significantly larger than anticipated, creating uncertainty about their effects on the economy. He noted that while the tariffs may cause a temporary spike in inflation due to a one-time price shift, the duration and impact of these effects remain uncertain.

The Fed Chair stated that avoiding negative outcomes will depend on the extent of the tariffs' impact, the time it takes for them to affect prices, and the anchoring of long-term inflation expectations. He acknowledged increased risks of higher unemployment and inflation but expressed confidence that the current monetary policy stance positions the Fed to respond effectively to potential economic changes.

Powell also addressed the possibility of the Fed cutting rates this year, stating that such a decision would depend on the tariffs' effects on employment and inflation. He emphasized that the decision-making process remains data-driven and independent of external influences, including calls from US President Donald Trump to cut interest rates.

In response to questions about external pressures, Powell assured that the Fed's focus remains on fostering maximum employment and price stability, considering only economic data, the outlook, and the balance of risks in their decisions.