Powell: Effects of tariffs on consumer prices now 'clearly visible'

Inflation Risk Assessment - Tariff effects on consumer prices are now visible and expected to accumulate, creating uncertainty regarding timing and amounts [1] - The key question for monetary policy is whether these price increases materially raise the risk of an ongoing inflation problem [1] - A reasonable base case suggests the effects will be relatively short-lived, representing a one-time shift in the price level, but the adjustment process will take time [2] - Tariff rates continue to evolve, potentially prolonging the adjustment process [3] - Upward pressure on prices from tariffs could spur a more lasting inflation dynamic, posing a risk [3] Potential Inflationary Dynamics - Workers might demand and get higher wages due to real income decline from higher prices, potentially setting off adverse wage-price dynamics [3] - Given the labor market is not particularly tight and faces increasing downside risks, that outcome does not seem likely [4] - Inflation expectations could move up, dragging actual inflation with it [4]