Federal Reserve's Mouthpiece: Trump's Tariff Policy Puts Powell in a "Dilemma"

ChainCatcher news, Nick Timiraos, a reporter for the Wall Street Journal known as the "Fed's mouthpiece," stated that Federal Reserve Chairman Jerome Powell is facing an increasingly difficult task.

Economists, business owners, and investors generally believe that the uncertainty brought about by the sudden large-scale tariff increases introduced by Trump—many of which will take effect on Wednesday—will push the economy closer to recession by weakening employment and consumption. This may necessitate interest rate cuts to alleviate economic downward pressure.

Meanwhile, the magnitude of the tariff increases could lead to significant price hikes for many imported goods, including raw materials used by domestic manufacturers. This may cause Federal Reserve officials to be concerned about inflation and support maintaining current interest rate levels, despite the growing risks to the economy and labor market.

"They are in a bind," said former Fed governor Laurence Meyer.

The U.S. Congress has tasked the Federal Reserve with maintaining low and stable inflation and a healthy labor market. No U.S. president's policies have posed such a profound potential conflict for these two tasks of the Fed in over forty years.