Fed Chief Cites Ferris Bueller in Remarks on Interest Rates

The Federal Reserve can stay patient and wait to see how tariffs and other economic policies of the Trump administration play out before making any changes to interest rates, Chair Jerome Powell said Wednesday. "As that great Chicagoan Ferris Bueller once noted, 'Life moves pretty fast,'" Powell said in a speech to the Economic Club of Chicago. "For the time being, we are well positioned to wait for greater clarity" on the impact of policy changes in areas such as immigration, taxation, regulation, and tariffs, Powell said.

• Powell reiterated that the Trump administration's tariffs are "significantly larger than anticipated," the AP reports. "The same is likely to be true of the economic effects, which will include higher inflation and slower growth," he said. Earlier this month, he said it was "highly likely" that the tariffs would lead to "at least a temporary rise in inflation." The Fed's next interest rate decision is expected on May 7.

• Powell also repeated that the Fed could face threats to both of the mandates it's been given by Congress, maximum employment and stable prices, because the Fed would essentially have to choose whether to keep interest rates high to fight inflation, or cut them to spur growth and hiring. "We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension," he said.
• The Wall Street Journal compares the situation the Fed is facing to a "soccer goalie who must decide whether to dive to the right and focus on inflation or to the left and address weaker growth as an opponent takes a penalty kick."
• The sharp volatility in financial markets since President Trump announced sweeping tariffs April 2, only to put most of them on hold a week later, has led to speculation about whether the Fed would soon cut its key interest rate or take other steps to calm investors, the AP reports. Yet the Fed is unlikely to intervene unless there is a breakdown in the market for Treasury securities or other malfunctions, economists say.

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