Federal Reserve Chairman Jerome Powell attributed the surge in inflation above the 2% target to the import tariffs imposed by President Donald Trump. In a press conference following the FOMC meeting, Powell explained that much of the current "excess" inflation stems not from overheated demand, but from rising prices of imported goods due to higher import duties. The central bank views the effects of these tariffs as a one-time price spike, rather than persistent inflationary pressures, although their impact is still being felt in current data.

Powell emphasized that if tariffs are excluded, core inflation is actually approaching the "low 2%" range, which is not too far from the Fed's target. This means that, excluding the impact of trade policy, price conditions in the US economy are actually starting to become more manageable. However, as long as tariffs remain in place and have the potential to be expanded, price pressures from the import cost side remain a risk that must be monitored, both for consumers and businesses.

Meanwhile, the Fed recently cut its benchmark interest rate by 25 basis points to a range of 3.50%–3.75%, its third cut this year. However, the latest projections suggest the central bank only envisions one more rate cut in 2026 and has signaled a longer pause after that. The combination of declining interest rates, persistently above-target inflation, and the price burden from Trump's tariffs means the future direction of the US economy depends on how this conflict between monetary policy and trade policy is resolved. (Cay)

Source: Newsmaker.id