Federal Reserve chair Jerome Powell has said that the economic impact of new tariffs is likely to be ‘larger than expected’ but that it was ‘too soon to say’ what the appropriate monetary policy response would be. 

Speaking at the Society for Advancing Business Editing and Writing Annual conference, in Arlington, Virginia, Powell was making public comments for the first time since President Donald Trump unveiled sweeping tariffs on imports into the US. These include a 10% base tariff on all foreign goods exported to the US as well as reciprocal tariffs set at 50% of what countries impose on the US. For example, the US government tallied China’s total of monetary and non-monetary barriers to a rate of 67%. Therefore, all Chinese imports will be taxed at 34%.

Markets have sold off dramatically since these tariffs were announced on Wednesday. The S&P 500 was down 3.5% this morning, following a fall of almost 5% yesterday, which was its worst day since June 2020. The Nasdaq fell 3.8% in morning...