Fed chair warns Trump's tariffs will worsen inflation and lower economic growth

[u/HellYeahDamnWrite]

https://www.upi.com/Top_News/US/2025/04/04/Powell-Fed-tariffs-inflation-warning-interest-rates/4231743788461/

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[u/QuietRainyDay]

Aka stagflation

The terrifying part is that many of his supporters are convinced that all of this is necessary. And/or better than where the economy was previously.

Reading Reddit posts over the last 2 days has made it clear:

These people think that the country was facing apocalypse. They cant actually tell you why- but something about Federal debt, money printing, etc. was going to trigger a Weimar-style meltdown and the disintegration of America. They also fully believe that the economy was already terrible.

So they are fine with all this. They think unnecessary misery now is justified to fix a non-existent crisis that they heard about on their podcasts and on Fox. If you are a sane voter, I hope you internalize this and think about it next time the polls open: there is a huge number of Americans that have been brainwashed into thinking that nuking the economy is necessary, that misery is good, all because of made-up crises that do not exist.

This is what we have to overcome to restore the country back to sanity.

[u/littleredpinto]

ehh. all part of the plan, only three more years to go before martial law implementation..should be real fun for those years. I for one plan on voting in another billionaire or person beholden to billionaires for the next presidency, assuming I get a choice but that is a crapshoot at this point..you will too, since you have absolutely no choice in the matter.

[u/Ok_Battle5814 → u/littleredpinto]

Might be sooner than that. These tariffs are going to unleash financial pain on millions and boiling points will be reached. Civil unrest is almost guaranteed at this point

[u/littleredpinto → u/Ok_Battle5814]

Like my priest used to say to me before our private lessons "you aint seen nothing yet"

[u/William_R_Woodhouse]

This is not news if you have been paying attention. Powell is an educated economist. DJT thinks he is smart. Only one of these guys should be in control of financial decisions in this country. Unfortunately I think we are fucked until the dumber of the two is gone.

[u/throwaway00119 → u/William_R_Woodhouse]

Congress should be in control of financial decisions, like the constitution stipulates. 

[u/malceum]

Hiking interest rates to fix "inflation" caused by tariff-induced shortages is even more insane than the tariffs themselves.

If the Fed is going to pretend that Trump's executive orders are lawful and are here to stay, it needs to start lowering interest rates as soon as possible.

[u/ManagementFluid2206 → u/malceum]

Why? Explain how combining inflation from low interest rates with self-imposed (and mind numbingly stupid) inflation from tariffs will help the average American.

[u/malceum → u/ManagementFluid2206]

1. Trump's policies are likely to send the US into a recession. If the Fed cuts rate too late, we might end up with another Great Depression or 2008 (the Fed delayed rate cuts in both cases).

2. The tariffs represent cost-push inflation and a supply shock. Lowering interest rates might help reduce such inflation, by allowing corporations to more rapidly expand onshore production as well as lowering their interest expenses.

As an analogy, imagine if a natural disaster wiped out a large portion of the US's industrial and agricultural production. Prices would skyrocket. But would you want rate hikes to address this problem? Of course not -- that would be the worst possible thing. You need low interest rates to rebuild.

Obviously, there is no good solution to Trump's unhinged and illegal tariffs (other than Congress or a judge overturning them). But if we're going to accept this, the Fed needs to start cutting rates to reduce the magnitude of the forthcoming recession.

[u/ryanmcstylin → u/malceum]

We need a massive investment to recoup half of what we will lose because of the tariffs. Nobody is going to make that investment with high rates. You are right this will be supply side inflation. Unlike 2022 companies aren't incentives to invest and fill the supply gap, because all that extra price they would be chasing is gobbled up by the tariffs.

[u/lbz25 → u/malceum]

Ive been shouting this from the hilltop for the last 2 years and i think many are starting to see the truth. Most of the current inflation is due to supply shocks or systemic failures. Raising interest rates just makes it all worse at this point

[u/p_pio → u/ManagementFluid2206]

Investment costs. Sudden increase in tariffs should hamper ability of corporations to invest as they have 3 choices to react in short term:

a) pay costs themselves;

b) increase prices and reduce demand;

c) shift products away from the US to other markets, which generally are poorer.

In such situation, lowering intrest rates, despite it's inflationary effects, might be beneficial, to allow them to procure investment capital.

There's also matter of bussinesses already in the US, especially SMEs, which may have to shift drastically their logistic chains and will in short term face sudden increase of costs: lower intrest rates may increase their chance of avoiding bankruptcy.

(tbc I'm not fan of this, just showing argument)