Jerome Powell

My gut tells me that uncertainty about the path of the economy is extremely elevated and that the downside risks have increased. The risks of higher unemployment and higher inflation have risen. But they haven't materialized yet. They're really not in the data yet.

Tariffs are highly likely to generate at least a temporary rise in inflation. It's also possible that the effects could be more persistent. 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.

We know that reducing policy restraint too fast or too much could hinder progress on inflation.

Netanyahu is under pressure from some in his government to resume the war against Hamas, especially after its displays of force during recent hostage releases. Netanyahu spoke to reporters before boarding a plane to Washington. He talked about the peace treaties with Arab countries that the last Trump administration helped broker.

And he said Israel's war against Hamas in Gaza and against Iran and its other proxies have redrawn the map of the Middle East.

Netanyahu is meeting first with Trump's Mideast envoy, Steve Witkoff, and then will talk to the president himself on Tuesday. Jerome Sokolovsky, NPR News, Tel Aviv.

If the economy remains strong and inflation does not continue to move sustainably toward 2 percent, we can maintain policy restraint for longer. If the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, we can ease policy accordingly.

Depending on the way things play out, that could include rate hikes, sorry, rate cuts. You know, it could include us holding where we are. We just are going to need to see, you know, how things play out before we make those decisions.

Russia is providing North Korea with support for its missile and nuclear programs. These developments could destabilize the Korean peninsula and even threaten the United States.

We must provide enough support to change the trajectory of this conflict once and for all.

Several countries are also condemning the suggestion by Israeli Prime Minister Benjamin Netanyahu that Saudi Arabia has enough land for a Palestinian state. Netanyahu appeared to be joking in response to a slip by an Israeli TV interviewer, but sensitivities are running high in the region. Jerome Sokolovsky, NPR News, Tel Aviv.

A statement by the Egyptian Foreign Ministry says the summit is being called in response to a Palestinian request. It says the leaders will gather on February 27th to discuss, quote, the new and dangerous developments in the Palestinian issue. Arab states have rejected Trump's recent comments about relocating Gaza's Palestinian residents and creating a Riviera of the Middle East there.

We've taken a step back and we're watching to see what the policies turn out to be and the ways in which they will affect the economy, and then we'll be able to act. Fortunately, our policy stance is in a good place for us to do that.

We have stressed that it will be very difficult to assess the likely economic effects of higher tariffs until there is greater certainty about the details. such as what will be tariffed, at what level, and for what duration, and the extent of any retaliation from our trading partners.

While uncertainty remains elevated, it is now becoming clear that tariff increases will be significantly larger than expected. And the same is likely to be true of the economic effects, which will include higher inflation and slower growth. The size and duration of these effects remains uncertain.

While tariffs are highly likely to generate at least a temporary rise in inflation, it's also possible that the effects could be more persistent. Avoiding that outcome would depend on keeping longer-term inflation expectations well anchored, on the size of the effects, and on how long it takes for them to pass through fully to prices.

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. We'll continue to carefully monitor the incoming data, the evolving outlook, and the balance of risks. We're well positioned to wait for greater clarity before considering any adjustments to our policy stance.

It is too soon to say what will be the appropriate path for monetary policy.

No, I would say that, you know, overworked, maybe not overstaffed. Everybody at the Fed works really hard. It's a place where people work.

So we're self-funding through our large balance sheet.

You know, indirectly, so we give away all of our profits, we give back to Treasury, and those profits would be higher if we didn't pay for the Fed. So in fairness, it does ultimately come, it's ultimately paid for.

Yeah, what are they talking about? In that sense, we're self-funded. Self-funded.

Not really. It's not going to be easy to identify with any accuracy exactly where costs do fall, but I think it would be hard to guarantee any particular outcome. I think we're just going to have to see. Great. Thank you.

So our independence is a matter of law. Congress has, in our statute, we're not removable except for cause. We serve very long terms, seemingly endless terms. So we're protected in the law. So Congress could change that law, but I don't think there's any danger of that. Fed independence has pretty broad support. across both political parties and in both sides of the hill.

So I think that's not a problem.

What we're going to do at the Fed is keep our heads down and keep working, wait to see what new policies emerge, and try to make a thoughtful, sensible set of policies on our part once we understand the implications of those.

I'm today not going to be sending any signals about the timing of any future actions.

But there really there's no limit on how much of that we can do other than that it must meet the tests under the law. There is no limit.

You know, we don't have authority, I don't believe, to lend to state and local governments.

I don't think we want that authority. I think that's something for Congress to do.

And joining us now in a rare and exclusive live interview is Jerome Powell.

In many cases, what people really need is direct fiscal support rather than a loan. And what we can do is loan. So there's a big need for fiscal policy. So tell me about that.

In support of our goals, today the Federal Open Market Committee decided to leave our policy interest rate unchanged. The risks of higher unemployment and higher inflation appear to have risen, and we believe that the current stance of monetary policy leaves us well positioned to respond in a timely way to potential economic developments.

My gut tells me that uncertainty about the path of the economy is extremely elevated and and that the downside risks have increased. The risk is, as we pointed out in our statement, the risks of higher unemployment and higher inflation have risen, but they haven't materialized yet. They're really not in the data yet.

We are well positioned to wait for greater clarity before considering any adjustments to our policy stance. We continue to analyze the incoming data, the evolving outlook and the balance of risks.

Not permitted under the law.

Not permitted under the law.

I do think with the arrival of the tariff inflation, further progress may be delayed. The SEP doesn't really show further downward progress on inflation this year, and that's really due to the tariffs coming in.

In our summary of economic projections, the median participant projects GDP to rise 1.7 percent this year, somewhat lower than projected in December. and to rise a bit below 2% over the next two years.

If the large increases in tariffs that have been announced are sustained, they're likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment. The effects on inflation could be short-lived, reflecting a one-time shift in the price level. it is also possible that the inflationary effects could instead be more persistent.

Avoiding that outcome will depend on the size of the tariff effects, on how long it takes for them to pass through fully into prices, and ultimately on keeping longer-term inflation expectations well anchored.

What looks likely, given the scope and scale of the tariffs, is that we will see certainly the risks to higher inflation, higher unemployment have increased. And if that's what we do see, and if the tariffs are ultimately put in place at those levels, which we don't know, then we won't see further progress toward our goals. But we might see a delay in that.

I think in our thinking, we would never do anything but keep achieving those goals. But we would, at least for the next, let's say, year, we would not be making progress toward those goals. Again, if that's the way the tariffs shake out. The thing is, we don't know that. There's so much uncertainty about the scale, scope, timing, and persistence of the tariffs.

In this situation... you actually have risks for higher unemployment and higher inflation.

It's difficult for a central bank because higher unemployment would call for speeding up the economy and higher inflation would call for slowing it down.

Clearly some of it, a good part of it, is coming from tariffs.

We will be watching very carefully for signs of weakness in the real data. Of course we will. But given where we are, we think our policy is in a good place to react to what comes, and we think that the right thing to do is to wait here for greater clarity about what the economy is doing.

Clearly some of it, a good part of it, is coming from tariffs. President Trump doesn't like it.

I feel like a lot of the actions that are happening are sort of trying to isolate us and make us feel small. But that's really not the case because we're all going through such similar things and we have to work together for change and just like for, I don't know, for something better than this to happen.

I really agree with you. I think that it has taught me a lot about resiliency in a way that I wasn't really expecting to have as a lesson in my college career. I just think that it's going to take me a few years longer than I expected to sort of realize my post-college dream. But I think that I'll get there eventually.

Dear William N. Powell, thank you for your interest in an internship with the U.S. Department of State.

My name is Liam Powell.

In terms of my future, I was really expecting to be able to have some sort of referral or return offer at either of my last two internships that I've had. And both of those prospects have fallen through.

we regret to inform you that the U.S. Department of State has canceled the summer 2025 cycle of the student internship program. In accordance with the president's executive order entitled Hiring Freeze and the Office of Management and Budget and Office of Personnel Management's joint memorandum, the department hereby rescinds your tentative offer to participate in the student internship program.

We wish you success in your academic career. The email came to me March 14th this year, so pretty far down the line after the hiring freeze.

there's a feeling that's pretty selfish of just knowing that the career field that I've spent so long studying for in my undergrad is just going to be in such a weird state of flux and toss up for such a long time. I think that talking to a lot of

professionals that work in the foreign aid and international development sector, there's a really common perspective that reform is absolutely necessary, but that this isn't the way to do it. And that this is a decision that objectively leads to the loss of a lot of lives in a way that a lot of the American public is very insulated from and just completely unaware of.

It's definitely not something for me that I've completely ruled out. But even if a new president comes along, there really isn't an easy way to magically rebuild the capacity that the US has built up with these international development programs over decades of work. So I think that it's more of a delaying of what my goals look like and where I want to be.

Law changes, no. I'm not aware of any law changes.

Not that I'm aware of.

Well, they'd have all the regulators except for the CFPB.

If, in fact, in the hypothetical, the CFPB weren't carrying that out.

Law changes? No, I'm not aware of any law changes.

Well, they'd have all the regulators except for the CFPB. Very good. If, in fact, in the hypothetical, the CFPB weren't carrying that out.

Growth looks like it's maybe moderating a bit, consumer spending moderating a bit, but still at a solid pace. Unemployment's 4.1%. Job creation most recently has been at a healthy level. Inflation has started to move up now, we think partly in response to tariffs, and there may be a delay in further progress over the course of this year. So that's the hard data. Overall, it's a solid picture.

Earlier, the Commerce Department had said that retail sales rose a better-than-expected 1.4 percent in March from the previous month and before President Trump's Liberation Day announcement of sweeping new tariffs on April 2nd.

And a survey of global fund managers by the Bank of America conducted in the days after that announcement found that almost half of them expected a hard landing for the global economy in the next 12 months. In the end, U.S. markets ended the day down. The Dow dipped about 1.7 percent, and the S&P 500 lost more than 2 percent.

The tech-heavy Nasdaq closed down just over 3 percent, dragged by NVIDIA that lost more than 7 percent. Federal Reserve Chair Jerome Powell has warned that the central bank could face difficult tradeoffs in trying to cushion the U.S. economy from the fallout of President Trump's trade war.

In remarks at the Economic Club of Chicago today, Powell said large tariff increases that push up consumer prices while weakening economic activity would put the Fed in the uncomfortable position of having to choose, promote low inflation or foster a healthy labor market.

The Fed chair implied that the central bank could elevate its inflation goal over its labor market mandate if the two were in conflict. In the discussion that followed, Powell described the possible effects of the significant policy changes the administration is making, particularly in trade.

The effects of that are likely to move us away from our goals. So unemployment is likely to go up as the economy slows in all likelihood, and inflation is likely to go up as tariffs find their way. And some part of those tariffs come to the... come to be paid by the public.

Powell repeated his view that the central bank doesn't need to rush to lower interest rates while nodding to a fluid economic outlook. As we reported this morning, NVIDIA told investors that the U.S. is banning the sale of its H20 AI chips in China and a handful of other countries.

NVIDIA is now caught between the world's two superpowers as they jockey to take the lead in AI development and could hurt the company's relationship with Wall Street. WSJ Heard on the Street columnist Asa Fitch joins me now with more. Asa, the H20 is not a huge part of Nvidia sales, yet it seems the government's restriction could create an issue for the company's performance on Wall Street, right?

As we mentioned in this morning's show, the company says it'll take a $5.5 billion charge in the current quarter. Is that all the financial effect they're expecting from this, or is there a longer-term impact?

This move from the government comes a day after NVIDIA says it'll make supercomputers entirely in the U.S. Where does that fit in with all of this?

U.S. tech stocks fall as Nvidia pays the price for turning into the biggest marketing chip between the U.S. and China. Plus, Jerome Powell is warning that the Fed may find itself in a tough spot, choosing between whether to focus on inflation or fostering a healthy labor market.

That was WSJ Heard on the Street columnist Asa Fitch. Thanks so much, Asa.

Coming up, research goes on pause after Harvard pushes back against the Trump administration. That's after the break.

Harvard University scientists are facing the prospect of laying off staff, euthanizing research animals, and bringing years-long science projects to a halt as a freeze on federal funds looms.

On Monday, after the university rejected government demands to change its operations and how it admits students, the Trump administration said it would stop more than $2 billion in funds previously awarded to the school. Stop work orders began arriving soon after. For more on what this means for Harvard, I'm joined by Nidhi Subbaraman, who covers Science for the Journal.

So Nidhi, what does the pause in grant funding mean for research at Harvard?

We may find ourselves in the challenging scenario in which our dual mandate goals are in tension.

How will this pause in funding affect the university's ability to attract and keep top researchers?

And how funding cuts at Harvard are already affecting the university's research. It's Wednesday, April 16th. I'm Alex Osola for The Wall Street Journal. This is the PM edition of What's News? The top headlines and business stories that move the world today. Trade restrictions fueled a tech stock route that deepened in U.S. markets today.

So what are Harvard's options in terms of funding? I mean, could it find another way to back its research?

That was WSJ reporter Neeti Superraman. Thank you so much, Neeti.

To read more about how Harvard ended up leading the college fight against Trump, check out the link we've left for you in the show notes. And be sure to check out our upcoming What's New Sunday episode as we explore what a loss of grant funding means for universities' bottom line.

In other news, a federal judge has found that the Trump administration willfully disregarded a court order when it failed to return planes full of migrants on their way to a prison in El Salvador. The judge ordered the government to act quickly to avoid possible prosecution for criminal contempt.

He ordered the government by next week to either show him an attempt to remedy the violation or provide information from administration officials under oath about the decision. Republican Representative Elise Stefanik is considering a run for New York governor in 2026. That's according to people familiar with the matter. President Trump nominated her late last year to be the U.S.

ambassador to the United Nations. But the administration withdrew her nomination last month, citing concerns about the tight margins for Republicans in the House. And the UK Supreme Court ruled today that only those born female can be considered women.

The landmark judgment excludes transgender women from the legal definition and paves the way for stricter limits on female-only spaces and services. Britain's top court said trans people would still be protected from discrimination on the basis of gender reassignment. And a trans woman could claim sex discrimination because she is perceived to be a woman.

And that's what's news for this Wednesday afternoon. Today's show was produced by Pierre Bien-Aimé with supervising producer Michael Cosmitas. I'm Alex Osola for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.

Stocks took another turn lower after Federal Reserve Chair Jerome Powell warned that the central bank could face difficult tradeoffs in trying to cushion the U.S. economy from the fallout of President Trump's trade war. Wall Street's fear gauge, the SIBO volatility index, jumped nearly 9 percent after falling for three trading days. The dollar, meanwhile, extended its decline.

The administration is entering into negotiations with many countries over tariffs. We'll know more with each week and month that goes by about where tariffs are going to land. And we'll know what the effects will be when we start to see those things. So we think we'll be learning. I can't tell you how long it will take.

But for now, it does seem like it's a fairly clear decision for us to wait and see and watch.

The economic environment has changed significantly since 2020, and our review will reflect our assessment of those changes. Longer-term interest rates are a good deal higher now, driven largely by real rates, given the stability of longer-term inflation expectations. Many estimates of the longer-run level of the policy rate have risen, including those in the summary of economic projections.

Higher real rates may also reflect the possibility that inflation could be more volatile going forward than during the inter-crisis period of the 2010s. We may be entering a period of more frequent and potentially more persistent supply shocks, a difficult challenge for the economy and for central banks.

Looking ahead, the new administration is in the process of implementing significant policy changes in four distinct areas. Trade, immigration, fiscal policy, and regulation. It is the net effect of these policy changes that will matter for the economy and for the path of monetary policy.

While there have been recent developments in some of these areas, especially trade policy, uncertainty around the changes and their likely effects remains high. As we parse the incoming information, we are focused on separating the signal from the noise as the outlook evolves. We do not need to be in a hurry, and we are well positioned to wait for greater clarity.

While uncertainty remains elevated, it is now becoming clear that tariff increases will be significantly larger than expected. And the same is likely to be true of the economic effects, which will include higher inflation and slower growth. The size and duration of these effects remains uncertain.

While tariffs are highly likely to generate at least a temporary rise in inflation, it's also possible that the effects could be more persistent.