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Tariff Inflation May Be 'Transitory,' Powell Says: Stocks Rally, Bitcoin Clears $85,000 As Bulls Return

Federal Reserve Chairman Jerome Powell indicated that inflation driven by new trade tariffs might be “transitory,” evoking comparisons to the Fed's 2022 misstep when it wrongly classified inflation as a short-lived phenomenon.

Speaking Wednesday following the Federal Open Market Committee's decision to hold rates at 4.25%-4.50%, Powell said the Fed is not in hurry to adjust interest rates and policymakers can “wait for clarity” before making moves.

How Much Of Inflation Is Due to Tariffs?

The Fed's updated macroeconomic projections show a slowing economy and stubbornly high inflation, raising concerns about stagflation. Growth forecasts for 2025 were revised downward, with real GDP now expected to expand 1.7%, down from December's 2.1% estimate.

The Fed's preferred measure, the Personal Consumption Expenditures price index, is now expected to hit 2.7% in 2025, up from 2.5%. Core PCE, which strips out food and energy costs, was revised from 2.5% to 2.8% for 2025.

Powell admitted it is “very challenging” to isolate tariff-driven inflation from broader price pressures.

“Some of it—a good part of it—is coming from tariffs,” he said. The difficulty lies in tracking which price increases are directly tied to tariffs ...