Wednesday 16/2025 – 09:45 PM
The President of the US Federal Reserve, Jerome Powell, expressed his concern in a speech today, Wednesday, that the central bank may find itself in a dilemma between controlling inflation and support for economic growth.
Car companies supply chains
Powell stated that for the auto sector, it is likely that the supply chains of car companies will be disturbed for years to come.
With the increasing uncertainty about the effect that the customs duties imposed by President Donald Trump will have said, while the high inflation and low growth are expected, it is unclear where the Federal Reserve will need to devote more focus.
Powell said in a speech pre -prepared in front of the Economic Club in Chicago: We may find ourselves in a difficult situation in which our goals related to the two states contradict, in the event of this, we will consider the extent of the economy a distance from each goal, and the various possible time prospects during which these gaps are expected.
The Federal Reserve is costing to ensure prices and full employment, and economists, including workers in the bank, consider that imposing fees constitute a threat to both, and customs duties are mainly a tax on imports, although their direct association with inflation was historical and not documented.
In a question and answers session after his speech, Powell said that customs duties are more likely to keep us away from our goals, perhaps during the remaining period of this year.
Upon price expectations
Powell did not give any indication of the direction he believes that interest rates are heading to, but he pointed out that at the present time, we are in a good situation that allows us to wait for more clarity before looking at any amendments to our political position.
The stocks fell to their lowest levels in the session with Powell’s conversation, while the revenues of the treasury bond turned to decrease.
In the event of high inflation, the Federal Reserve will keep the interest rates fixed, or even raise it to curb demand, but in the event of slowing growth, the Federal Reserve may be convinced to reduce interest rates, and Powell stressed the importance of keeping inflation expectations under control.
The markets expect that the Federal Reserve will start reducing interest rates again in June, and to enact discounts by three or four quarters of a percentage by the end of 2025, according to the Fedwatch scale of the CME group.
