After the Federal Reserve decided to keep interest rates unchanged as expected, Federal Open Market Committee (FOMC) Chairman Powell focused on the Trump administration's tariffs at a press conference: how much tariffs have been considered in the Fed's latest forecast, what impact they have had, and how likely it is to push up inflation, lower growth, harm employment, and affect interest rates, even causing the US economy to fall into recession.

1. The first question directly involves to what extent Trump's trade tariffs have changed the economic environment. Powell set the tone for the dialogue early on, insisting that the situation is first and foremost uncertain.

He said, "It will be very difficult to accurately assess how much inflation comes from tariffs. You may have seen a significant increase in commodity inflation in the first two months of this year. Attempting to trace back to actual tariff increases, what tariffs are and what are not, is very, very challenging

He admitted, "The answer is obviously that a large part of it comes from tariffs. But we will work hard, and other forecasters will also work hard, to find the best way to distinguish between non-tariff inflation and tariff inflation

2. When asked why the latest long-term inflation expectations and interest rate path of the Federal Reserve seem unchanged despite the approaching tariffs, Powell agreed that at this stage, the Federal Reserve believes that the impact of tariffs may be temporary rather than long-term.

The Federal Reserve Chairman said, "I think this is the basic situation, but as I said, we really can't know. We will have to see the actual progress of things. In fact, there hasn't been much change, and I think part of the reason is that you see weaker growth but higher inflation, so they offset it to some extent. And, frankly speaking, in this highly uncertain environment, there is a bit of inertia when it comes to changing something

3. When asked to what extent the new government's policies are reflected in various economic indicators, Powell said there is evidence that they have already been reflected, but it is too early to accurately determine or quantify their impact.

He said, "It's only in the early stages, just a few months have passed. In the past two months, we have had two very strong commodity inflation data, which is very unexpected. I think it's difficult to trace back to specific tariff issues. This is either noise or a resurgence, which is also very likely, but if this situation continues, it must be related to people buying before tariffs or raising prices before tariffs

He added, "Such incidents happen and are difficult to capture because many of them are indirect

4. When asked about the Anderson Forecasting Center at the University of California, Los Angeles, the Federal Reserve chairman said there is a high possibility of an economic recession this year.

Powell replied, "The possibility of an economic recession always exists unconditionally. If you look back at the past few years, it may have been within a quarter range at any time. If you look at external forecasts, some of them have increased the likelihood of a recession to some extent, but still at a relatively mild level, still within the traditional range

He added, "If you look back two months ago, people were still saying that the likelihood of an economic recession was extremely low, so it has changed, but not high

5. When asked to further elaborate on his assertion that a significant portion of the increase in inflation expectations is due to tariffs, Powell pointed out that the expected progress of the Fed's favored 2025 inflation indicator has stalled.

He said, 'In the Summary of Economic Forecasts (SEP), you will see that there has been no further progress in core inflation this year, and we are a bit stagnant, moving sideways.'. We don't want people to write down how much comes from tariffs and how much doesn't. We know that a part of it comes from tariffs, and we know that tariffs are coming soon. All forecasters believe that tariff inflation will affect core CPI inflation, and it's in there

He added, "I can't tell you how many there are

6. Chairman Powell was asked about the Fed's practice of removing the statement that "the committee determines that the risks of achieving employment and inflation targets are roughly balanced," and whether this indicates that the Fed is now more concerned about inflation or employment.

He replied, "Actually, it doesn't refer to these two things. This is really not a signal. I want to say that the more important thing about risk now is... the participants have widely increased their estimation of risk, not only the risk of uncertainty, but also the risk of economic growth, employment, and inflation tasks. Now, this is more prominent than whether they are in a balanced state.