Jerome Powell said words on Wednesday afternoon. Some of them were meaningful.

The Trump administration’s tariffs, Powell told an event hosted by the Economic Club of Chicago, are “likely to generate at least a temporary rise in inflation.”

“At least.” Those two words matter, as they suggest the Fed’s no longer prepared to write off the levies as unlikely to create anything more than a “transitory” uptick in price pressures or a one-off increase in the price level.

Earlier this week, Chris Waller, who previously downplayed the potential impact of the tariffs, conceded that the duties, as announced on April 2, constitute “one of the biggest shocks to affect the US economy in many decades.” That’s saying something considering “many decades” is a period that includes a pandemic and the worst financial crisis since the Great Depression.

Waller laid out two scenarios in his address to the CFA Society, a “large” tariff outcome and a “small” tariff eventuality. Under the former, Waller assumed the average US tariff rate stuck at “around 25%” until the end of 2027, which he said would be necessary if the goal really is to “remak[e] the US economy into one that produces a larger share of the goods it consumes.”

In that “remake” scenario, which Waller tacitly suggested may be infeasible, growth would “slow to a crawl” and the jobless rate would rise “significantly,” as would inflation. Under the more benign, “small” tariff scenario, which assumes a 10% average rate, negative outcomes would be attenuated.

In his speech, Waller “went there,” so to speak, where that means he suggested, quite explicitly, that even in the “large” tariff scenario, the impact on inflation would be “temporary.” Here’s what he said:

Yes, I am saying that I expect that elevated inflation would be temporary, and “temporary” is another word for “transitory.” Despite the fact that the last surge of inflation beginning in 2021 lasted longer than I and other policymakers initially expected, my best judgment is that higher inflation from tariffs will be temporary. If this inflation is temporary, I can look through it and determine policy based on the underlying trend. I can hear the howls already that this must be a mistake given what happened in 2021 and 2022. But just because it didn’t work out once does not mean you should never think that way again.

He went on to use a football analogy to explain himself. I’ll spare you.

Powell seemed less sanguine on Wednesday, but he avoided doomsaying. The inflationary effects of the tariffs could well “be more persistent,” he warned, before reiterating familiar talking points about “avoiding that outcome” by working to “keep longer-term inflation expectations well anchored.

“The tariffs, he said in the Q&A in Chicago, were larger than the Fed expected “even in our upside case,” and he was keen to note that if the pandemic taught us anything, it’s that supply disruptions “can take time to resolve.”

He cautioned that the effects of the administration’s trade policy are likely to move the Fed “away from” its goals, which could find themselves “in tension,” as the growth drag from the tariffs begs for rate cuts while the inflationary read-through argues for policy restriction. “If that were to occur,” Powell said, “we would consider how far the economy is from each goal, and the potentially different time horizons over which those respective gaps would be anticipated to close.”

In other words: If the dual mandate ends up in tension, the Fed’s actions will depend on which is worse, the growth outlook or the inflation situation. For now, he told the audience, the goals aren’t clashing given that the US labor market’s still in a good place.

This feels gratuitous, but I’d be remiss not to note (again) that the University of Michigan five- to 10-year inflation expectations series Powell put so much emphasis on in June of 2022 when explaining the Fed’s decision to up the rate-hike ante to 75bps is now unglued entirely, having printed a harrowing 4.4% in the preliminary read for March. The year-ahead (i.e., 12-month) series in the same survey rose to 6.7%, the highest since the early 80s.

Powell played down those readouts at the March FOMC meeting. At a subsequent speaking engagement, he seemed less sure of himself, and it’s a good bet that if he wasn’t worried about the Michigan prints last month, he is now. For his part, Waller this week said he doesn’t put much stock in household inflation expectations, preferring market-based measures instead. (Because who cares what households think?)

On Wednesday, Powell was asked about concerns the Fed might cut access to dollar swap lines under pressure from Trump. He denied that, saying the Fed “absolutely” stands ready to provide dollars overseas if needed, and reminded anyone listening that supporting dollar funding markets is ultimately in the public interest.

Commenting on recent volatility in financial assets, Powell said markets are “struggling with a lot of uncertainty,” and “functioning about as you’d expect them to” under the circumstances. He used the word “orderly.” I’m not sure if that’s entirely apt.

As usual, Powell was compelled to reassert the Fed’s independence, which is “a matter of law.” Fed officials, he reiterated, “are not removable except for cause.”

The context this time is a highly contentious legal debate over Trump’s authority to remove agency heads, and whether any such authority, if granted (“acquiesced” is probably a better word) by the Supreme Court, could be applied to the Fed.

That’s a story all its own. Suffice to say some Republicans are trying to craft an exception for the Fed Chair that would safeguard monetary policy independence while giving Trump broad leeway to remove other agency heads at his discretion.

Coming back to tariffs, Powell stated the obvious: There’s no modern precedent for duties the size of those Trump’s proposing, threatening and implementing.

In the closing statement of his prepared remarks, Powell quoted one of history’s greatest Chicagoans: Ferris Bueller. “Life moves pretty fast,” he said. “For the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance.”