With still weeks to go before his official swearing-in, President-elect Donald Trump is already causing worry among members of the Federal Reserve Board of Governors with his proposed policy agenda.
That’s according to a Saturday article in the Washington Post, which reported that the president-elect’s proposed new tariffs on imported goods, promised mass deportations and potentially a $4.6 trillion round of new tax cuts could be among the concerns Federal Reserve Chairman Jerome Powell alluded to regarding the incoming administration. Powell didn’t name any specific policy, but he did say there was “uncertainty around inflation” when asked about how the Fed would handle macroeconomic policy once Trump is inaugurated.
“Some people did take a very preliminary step and start to incorporate, you know, highly conditional estimates of economic effects of policies,” Powell said this week.
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“It’s not unlike driving on a foggy night or walking into a dark room of furniture,” he added. “You just slow down.”
At the conclusion of the Fed’s most recent two-day meeting, the nation’s central bank announced another reduction in interest rates, which is a continuation of the “soft landing” President Joe Biden’s administration achieved in 2024 (“soft landing” is the economic term for reducing inflation without raising the unemployment rate). However, Powell cautioned that the Fed may hold off on future rate cuts until the impacts of Trump’s policies — should they become law — have been fully realized.
“They are acknowledging reality,” economist Joe Brusuelas told the Post. “The risks to the outlook are clearly linked to expansionary fiscal policy, trade policy and tighter immigration policy.”
Trump has proposed 25% tariffs on goods imported from Canada and Mexico, and a new 10% tariff on goods brought in from China. Walmart finance chief John Rainey previously said any new tariffs would likely mean higher sticker prices, and the tariff on Chinese imports could drive up prices for big-ticket electronics like smartphones, laptop computers and video game consoles.
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Click here to read the Post’s report in its entirety.
