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On Wednesday, Jerome Powell, Chair of the US Federal Reserve (Fed), acknowledged that the central bank faces challenges in fulfilling its dual mandate of price stability and maximum employment. This complexity arises due to the intensification of the global trade war, which could escalate tariffs, fuel inflation while undermining growth, and complicate decisions on interest rates.
“We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension,” Powell stated in his prepared remarks at the Economic Club of Chicago. “If that were to occur, we would consider how far the economy is from each goal, and the potentially different time horizons over which those respective gaps would be anticipated to close.”

Higher import levies and deteriorating global trade relations are expected to increase inflation, while economic growth and labor market strength weaken. Lower interest rates would support economic activity but could also fuel inflation. On the other hand, raising rates might further dampen the already slowing growth.
Powell, however, emphasized that price stability remains the Fed’s top priority: “Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem. Without price stability, we cannot achieve the long periods of strong labor market conditions that benefit all Americans.”
While he provided no clear indication regarding the timing of any policy change, Powell said, “For the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance.”

Wall Street declines as gold price reaches new high

Powell’s comments reduced the likelihood of a Fed rate cut in June, further adding to the sell-off in US equity markets already pressured by Nvidia’s decline on Wednesday. The tech-heavy Nasdaq Composite dropped 3.07%, the S&P 500 fell 2.24%, and the Dow Jones Industrial Average shed 1.73%.
The US dollar weakened further, with the Dollar Index closing below 99 for the first time since March 2022. The euro surged past 1.14 in late trading before the EUR/USD pair eased slightly to 1.1369 by 5:23 am CEST.
Sentiment stabilized somewhat during the Asian session on Thursday, with US stock futures recovering and the dollar rebounding modestly.
Meanwhile, gold prices surged to fresh record highs as investors sought safe havens. Gold futures on Comex jumped 3.3% to $3,351 per ounce, while spot gold rose 3.5% to $3,339 per ounce at 4:46 am CEST.

Focus on the ECB decision

Powell’s remarks came just hours ahead of the European Central Bank’s (ECB) monetary policy decision later today. The ECB is widely expected to cut interest rates for the third consecutive time this year. With eurozone inflation continuing to ease, the

Source: https://www.euronews.com/business/2025/04/17/feds-powell-warns-tariffs-may-upset-inflation-growth-balance