Understanding Core Inflation: Powell’s Alarming Warning on Tariff Impact

Key Points

1. Jerome Powell revealed that tariffs contribute between 30% and 40% to core inflation, emphasizing their substantial but often overlooked economic impact.

2. Tariffs increase production costs for businesses, which are often passed on to consumers, thereby fueling inflation.

3. The uncertainty caused by tariffs can deter investment and expansion plans, further complicating economic stability.

4. Core inflation is a key focus for the Federal Reserve as it provides a clearer signal of long-term price trends by excluding volatile components like food and energy.

5. Understanding the role of tariffs in inflation is crucial for households to manage finances and for policymakers to navigate economic challenges.