Powell: Raising inflation forecasts is due to tariffs
Federal Reserve Chairman Jerome Powell said that policymakers' inflation expectations, as expected in their report on June 18, were linked to tariffs.
He said that the near-term inflation expectations have risen recently as a result of tariffs, while long-term inflation estimates remain consistent with the Fed's 2% target.
The Fed is patient until gaining a deeper understanding of economic dynamics, he added, noting that it is well-positioned to wait before adjusting policies.
Tariffs may cause a one-time price increase, but they could also create long-term inflationary pressures, their full impact has yet to be seen and is still developing.
Furthermore, he indicated that the 'dot plot' should be interpreted with a grain of salt as the macroeconomic environment remains highly risky.
'No one holds these rate paths with a great deal of conviction, and everyone would agree that they're all going to be data dependent,' Powell stated.
The labor market does not need a rate cut, as a very limited and persistent slowdown in employment is expected, the Fed Chairman said.
However, there is nothing to worry about at this time, he said, pointing out that he is not considering continuing at the Fed.
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