Déjà Vu: Did Fed Chair Jerome Powell Really Just Say the "T" Word? Why Investors Should Be Paying Attention
As expected, the Federal Reserve left its benchmark federal funds rate unchanged at its March meeting this week. But the more surprising news came at Fed Chair Jerome Powell's post-meeting press conference, where he answered a number of questions regarding the Fed's expectations for inflation, interest rate cuts this year, and President Donald Trump's tariffs.Interestingly, in one of Powell's answers discussing the potential impact of tariffs on inflation, Powell said the word "transitory." That word infamously dogged him in 2021 and 2022 after he suggested that the post-pandemic increases in inflation would be transitory, and so would moderate without the need for Fed action -- a prediction that turned out to be too optimistic.In that context, Powell's use of the word "transitory" as it pertains to the threat of inflation today may be giving some investors déjà vu. And investors should certainly be paying attention.Continue reading
As expected, the Federal Reserve left its benchmark federal funds rate unchanged at its March meeting this week. But the more surprising news came at Fed Chair Jerome Powell's post-meeting press conference, where he answered a number of questions regarding the Fed's expectations for inflation, interest rate cuts this year, and President Donald Trump's tariffs.
Interestingly, in one of Powell's answers discussing the potential impact of tariffs on inflation, Powell said the word "transitory." That word infamously dogged him in 2021 and 2022 after he suggested that the post-pandemic increases in inflation would be transitory, and so would moderate without the need for Fed action -- a prediction that turned out to be too optimistic.
In that context, Powell's use of the word "transitory" as it pertains to the threat of inflation today may be giving some investors déjà vu. And investors should certainly be paying attention.
