Federal Reserve Chairman Jerome Powell has warned that tariffs are already driving up prices in a sharp rebuke to Donald Trump.
The president insists that his policies have curbed inflation, and he has repeatedly urged the Fed Chair to lower interest rates.
Resisting Trump’s demands once again, Powell explained that while prices have eased when it comes to services, costs are going up in other parts of the economy.
“Increased tariffs are pushing up prices in some categories of goods,” Powell said. “Near-term measures of inflation expectations have moved up on balance over the course of this year on news about tariffs.”
The head of the U.S. Central Bank made the remarks while speaking at his press conference at the end of the Fed’s two-day meeting.
On Wednesday, the Federal Reserve announced it was holding the federal funds rate steady between 4.25 percent and 4.5 percent despite Trump begging officials to lower interest rates.
Trump has announced a series of steep tariffs since taking office, but he has postponed implementing some of them on numerous occasions while trying to lock in trade deals, while others have gone into effect.
Powell explained on Wednesday that the impact of the tariff policy is still in its early days, but consumers are already starting to bear the cost of some of the president’s increased tariffs as the prices are passed on to Americans as the U.S. rakes in billions.
“I think what we’re seeing now is substantial amounts of tariff revenue being collected,” the Fed chair said. “The evidence seems to be mostly not paid—paid only to a small extent through exporters lowering their price – and companies or retailers… people who are upstream, institutions that are upstream from the consumer are paying most of this for now.”
“It’s starting to show up in consumer prices,” he quickly added. “We expect to see more of that, and we know from surveys that companies feel that they have every intention of putting this through to the consumer.”
Powell said in some cases businesses won’t be able to shift the increased costs to consumers, but they are really going to have to see what happens over time. He also indicated that the process of shifting the cost burden will be slower, but they never expected it to be fast.
The Federal Reserve’s decision not to lower interest rates at their July meeting was not unexpected, but came as the president has bashed Powell repeatedly for not lowering rates.
Trump has blasted the Fed chair as “too late,” “stupid,” and even called for him to resign in recent months.
But the president chickened out of criticizing Powell directly to his face when he showed up a the Federal Reserve to tour building renovations last week, instead jokingly stating “well, I’d love him to lower interest rates.”
Early on Wednesday, Trump was back to taking shots at Powell on social media.
“‘Too Late’ MUST NOW LOWER THE RATE. No Inflation!” the president wrote on Truth Social.
He also complained about the Fed ahead of its announcement during an event at the White House.
“We should be lowering the rates,” Trump said in response to a reporter.
He referred to Powell as “this gentleman” before arguing he has “done a bad job.”
“I hear they’re going to do it in September, not today. For what reason? Nobody knows,” Trump vented about the Fed holding rates steady.
Asked on Wednesday if he was concerned over the Federal Reserve’s independence going forward after Trump’s barrage of attacks, Powell tried to keep the peace, but he argued the independence is important.
“I think that having an independent central bank has been an institutional arrangement that has served the public well, and as long as it serves the public well, it should continue and be respected,” Powell said.
He claimed the independence of the central bank gives it the ability to make “very challenging decisions” in ways that are “focused on the data” and “not political factors.”
