“Federal Reserve Chair Jerome Powell warned that the central bank could have less flexibility to quickly cushion the economy from the fallout of President Trump’s trade war, sending stocks down on Wednesday,” the Wall Street Journal reports.
“Powell said he saw a ‘strong likelihood’ that consumers would face higher prices and that the economy would see higher unemployment as a result of tariffs in the short run.
”“This would create a ‘challenging scenario’ for the central bank because anything it does with interest rates to address inflationary pressures could worsen unemployment, and vice versa.”
In short, he’s forecasting a period of stagflation.
