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Powell Rules Out Pre-Emptive Rate Cuts While Flagging Tariff Risks to Inflation, Jobs
The Straits Times
|May 09, 2025
Federal Reserve Chief Says Inflation Still Running Above Target, More Data Needed
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WASHINGTON - US Federal Reserve chairman Jerome Powell has ruled out pre-emptive rate cuts as inflation is still running above target, while adding that tariffs could lead to higher inflation and unemployment.
"If the large increases in tariffs that have been announced are sustained, they're likely to generate a rise in inflation, a slowdown in economic growth and an increase in unemployment," Mr. Powell said on May 7 at the conclusion of a two-day rate-setting meeting.
"The effects on inflation could be short-lived, reflecting a one-time shift in the price level," he said. But it is "also possible that the inflationary effects could instead be more persistent".
Mr. Powell and his colleagues are determined to keep tariffs from sparking a lasting rise in inflation, and several officials have signaled they would not support lowering interest rates pre-emptively to protect against a slowing economy.
"It's not a situation where we can be pre-emptive, because we actually don't know what the right response to the data will be until we see more data," Mr. Powell said on May 7.
This story is from the May 09, 2025 edition of The Straits Times.
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