Fed Chair Jerome Powell says Trump tariffs are ‘likely to raise inflation’ with economic effects ‘significantly larger’ than expected

Fed Chair Jerome Powell warned on Friday that President Donald Trump’s sweeping tariffs would likely push inflation higher, dampening investors’ hopes that the central bank would cut interest rates later this year. 

“Higher tariffs will be working their way through our economy and are likely to raise inflation in coming quarters,” Powell said, speaking in Washington, D.C. at a business journalism conference.

“It is now becoming clear that tariff increases will be significantly larger than expected, and the same is likely to be true of economic effects, which will include higher inflation and slower growth," he said.

Powell emphasized that the current economy is strong, citing a strong jobs report released on Friday. But he also said that the uncertainty from the president’s sweeping policy changes is making consumers and businesses nervous and putting the Fed into wait-and-see mode. The data from the jobs report was collected before several recent events that could have major economic repercussions, like Trump’s “Liberation Day” tariffs announcement, Powell acknowledged. like Trump’s "Liberation Day" tariffs announcement, Powell acknowledged. 

This story was originally featured on Fortune.com