Federal Reserve Chair Jerome Powell speaks during a news conference after the Federal Open Market Committee meeting, Wednesday, March 19, 2025, at the Federal Reserve in Washington. (AP Photo/Jacquelyn Martin)2025-04-04T15:31:56Z ARLINGTON, Va. (AP) The Trump administrations expansive new tariffs will likely lead to higher inflation and slower growth, and the Federal Reserve will focus on keeping price increases temporary, Fed Chair Jerome Powell said Friday. Powell said that the tariffs, and their impacts on the economy and inflation, are significantly larger than expected. He also said that the import taxes are highly likely to lead to at least a temporary rise in inflation, but added that it is also possible that the effects could be more persistent. Our obligation is to ... make certain that a one-time increase in the price level does not become an ongoing inflation problem, Powell said in remarks being delivered in Arlington, Virginia. Powells focus on inflation suggests that the Fed will likely keep its benchmark interest rate unchanged at about 4.3% in the coming months. That is likely to disappoint Wall Street investors, who now expect five interest rate cuts this year, a number that has increased since President Donald Trump announced the tariffs Wednesday. Trump, separately, urged Powell to cut rates, citing lower inflation and energy prices. This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates, Trump said on his social media platform, Truth Social. CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!Economists forecast that the tariffs will weaken the economy, possibly threaten hiring, and push up prices. In that scenario, the Fed could cut rates to bolster the economy, or it could keep rates unchanged or even hike them to combat inflation. Powells comments suggest the Fed will mostly focus on inflation. Powell emphasized that the full impact of the tariffs on the economy arent yet clear, and the Fed will likely stay on the sidelines until it has more clarity about the economy. It is just too soon to say what the appropriate ... response will be, Powell said. Powells remarks come two days after Trump unveiled sweeping tariffs that have upended the global economy, prompted retaliatory moves by China, and sent stock prices in the U.S. and overseas plunging. Weaker growth and higher prices are a tricky combination for the Fed. Typically the central bank would reduce its key interest rate to lower borrowing costs and spur the economy in the event of slower growth, while it would raise rates or keep them elevated to slow spending and combat inflation. The Fed is in a tough spot with inflation set to accelerate and the economy poised to slow, said Kathy Bostjancic, chief economist at Nationwide. Powell said the economy and hiring remain solid, for now, but he noted that consumers and businesses have become more pessimistic about the outlook.He also said inflation has fallen sharply from its peak in 2022, but said that recently progress toward the central banks 2% target has slowed.Some positive news arrived Friday when the government reported that hiring accelerated in March, with 228,000 jobs added, though the unemployment rate ticked up to 4.2%, from 4.1%. Yet those figures measure hiring in mid-March, before the scope of the duties became clear. The tariffs have also raised uncertainty about how the economy will fare in the coming months, which could limit businesses willingess to invest and hire. CHRISTOPHER RUGABER Rugaber has covered the Federal Reserve and the U.S. economy for the AP for 16 years. He is a two-time finalist for the Gerald Loeb award for business reporting. twitter mailto