ISTANBUL 

US Federal Reserve (Fed) Chair Jerome Powell warned on Wednesday that if the recently announced large tariff increases are sustained, they will likely result in an increase in inflation, a slowing of economic growth, and an increase in unemployment.

"As economic conditions evolve, we will continue to determine the appropriate stance of monetary policy based on the incoming data, the outlook, and the balance of risks," Powell said in a press briefing after the FOMC's policy rate decision.

"The tariff increases announced so far have been significantly larger than anticipated. All of these policies are still evolving, however, and their effects on the economy remain highly uncertain," Powell said.

He added that the tariffs will likely cause a temporary increase in inflation, reflecting a one-time shift in the price level, adding that the effects could be more long-lasting.

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

"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," he noted.

Powell stated that the prospect of the Fed cutting rates this year will "depend" on the effects of the tariffs on employment and inflation.

"There are cases in which it would be appropriate for us to cut rates this year. There are cases in which it wouldn't. And we just don't know. Until we know more about how this is going to play out (tariffs) and what the economic implications are for employment and inflation."

In response to a question about whether US President Donald Trump's call on Powell and the Fed to cut interest rates influences their decision and makes his job more difficult, Powell said it does not affect their job "at all."

"So, we are always going to do the same thing, which is we are going to use our tools to foster maximum employment and price stability for the benefit of the American people. We are always going to consider only the economic data, the outlook, the balance of risks, and that's it. That's all we are going to consider. So it really doesn't affect either our job or the way we do it," he said.