Jerome Powell, Chairman of the US Central Bank Federal Reserve, has said a very important thing. He believes that the main reason for rising inflation in America is not the high demand of the people, but the tariffs imposed on imported goods. His assessment has come at a time when economies around the world are keeping an eye on the US trade policy and its global impact.

On Wednesday, Jerome Powell said- ‘These high inflation figures reflect increased prices in most of the commodity sectors and this increase is due to the impact of tariffs.’ He also said that price pressure in the services sector is gradually decreasing. In the same meeting, the Federal Open Market Committee decided to keep the interest rates in the range of 3.5 to 3.75 percent for the time being. Powell said the current policy is appropriate because inflation still remains above the Fed’s 2 percent target.

Did Trump’s tariffs increase inflation in America?

According to Jerome Powell, most of the impact of the tariffs has now been seen in the economy. He said- ‘A large part of it has passed. Tariffs are usually a one-time price increase. Tariff-related inflation may gradually reach its highest level and then decline. He said that while the prices of goods have increased due to trade measures, the trend of decline in inflation in the service sector is continuing. Talking about inflation figures, he said that in the 12 months till December, inflation in items of personal use of common people was 3.0 percent, while total PCE inflation was recorded at 2.9 percent.

1. Powell said the Federal Reserve Bank is watching closely to see how tariff-related price increases play out going forward. They estimate that if no new major tariffs are imposed, inflation in goods will first reach a peak and then gradually start coming down.
2. He also said that people’s and markets’ expectations about inflation currently remain stable and most long-term projections are in line with the Fed’s 2 percent target.
3. On the future policy, he made it clear that there is no fixed time table of the Federal Reserve Bank, the decision will be taken after looking at the situation. Speaking on the American economy, Powell said that the pace of growth is strong. Consumer spending remains strong and business investment is increasing, although the housing sector remains weak.

What will be the impact of American inflation on the world?

He also admitted that the pace of improvement in inflation has slowed down a bit in recent months, but this picture is not completely related to demand. If it were not caused by tariffs, it would be considered demand-related, and demand-driven inflation would be much more difficult to control. America is one of India’s largest trading partners. In such a situation, American trade policy and inflation trends also impact the global supply chain, export prices and investment flows. Central banks generally view price increases from tariffs as temporary, unless they change long-term inflation expectations.