Fed lacks ‘effective’ tools to tackle supply chain disruptions: Powell

US Federal Reserve Chair Jerome Powell said that the tools available to the central bank to address potential supply chain disruptions stemming from the trade war are “very limited and not particularly effective”.

In a press conference following the Federal Open Market Committee (FOMC) meeting on May 7, Powell explained that the responsibility for resolving supply chain issues stemming from the trade conflict initiated by President Donald Trump largely lies with the government and private sector.

He noted that, in theory, the Fed could reduce interest rates to stimulate demand. However, Powell emphasized that this approach would have limited effectiveness in solving supply chain challenges.

Although tariffs have not yet caused significant price increases, Powell assured that the Federal Reserve is carefully monitoring the situation and analyzing data from the same sources available to the public.