Raghuram Rajan Grills Jerome Powell: Trump Tariffs Leading To Recession In U.S.?

In this high-profile and deeply insightful conversation at the Economic Club of Chicago, former RBI Governor Raghuram Rajan sits down with US Federal Reserve Chairman Jerome Powell to unpack the most pressing issues facing the global economy in 2025. From the fallout of aggressive tariff policies to the possibility of a Fed-engineered soft landing, the discussion covers it all. Powell reflects on a surprisingly resilient 2024, with growth at 2.4% and unemployment remaining low—but warns that the tide may be turning. Rising tariffs could fuel inflation and slow the economy, possibly pushing the Fed away from its twin goals of price stability and maximum employment. Powell also outlines the risks of inflation becoming persistent, depending on the magnitude, timing, and public perception of tariff impacts. His message is clear: anchoring long-term inflation expectations is more crucial than ever. Rajan presses Powell on the subtleties of policy design, including how firms might use tariff hikes to justify broader price increases—even on untariffed goods. A must-watch for investors, policymakers, and anyone tracking the future of interest rates and economic strategy.