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Donald Trump’s tariffs will send US inflation soaring to as high as 4 per cent this year, push unemployment higher and hit economic growth amid “pervasive” uncertainty, a top Federal Reserve official has warned.

New York Fed chief John Williams said in prepared remarks on Friday that a “pervasive sense of uncertainty is becoming increasingly evident, especially in so-called soft data such as surveys and information from business contacts”.

He added that there had been “a sharp decline in consumer sentiment, and business sentiment measures have weakened, too”.

Williams said that he expected inflation to reach 3.5 to 4 per cent this year as a result of Trump’s tariffs, much higher than the Fed’s 2 per cent mandate and far above the 2.5 per cent February reading for the central bank’s preferred PCE inflation measure.

He also said that he expected growth to “slow considerably from last year’s pace, likely to somewhat below 1 per cent”, while unemployment could rise from 4.2 per cent currently to 4.5 to 5 per cent.

The gloomy assessment from one of the Fed’s most prominent officials comes as US financial markets have been rocked over the past week by Trump’s announcement of ultra-protectionist trade policies that he only partially rolled back.

Last week, Jay Powell, the Fed chair, had warned that the tariffs proposed by the administration had been larger than expected and the result was likely to be higher inflation and slower growth. But Williams’ comments are more dire and more specific, and are far gloomier than the projections posted by Fed officials during their March meeting, which had inflation rising by 2.7 per cent and GDP expanding at a rate of 1.7 per cent.

Despite the gloomy outlook, Williams said “the current modestly restrictive stance of monetary policy is entirely appropriate given the solid labour market and inflation still above our 2 per cent goal”.

The comments from Williams came as data showed US consumers’ inflation expectations surging to their highest reading since 1981 in April, as sentiment fell sharply for a fourth consecutive month.

The University of Michigan’s consumer sentiment index fell to a preliminary reading of 50.8 in April, its fourth successive drop and the lowest reading since June 2022, according to LSEG. Economists polled by Reuters had estimated a fall to 54.5 from 57 in March. 

Retired Air Force Lt. Gen. John Dan “Razin” Caine is officially the chair of the Joint Chiefs of Staff after the Senate confirmed him in the middle of the night.

The 60-25 vote happened just after 2 a.m. on Friday before the Senate adjourned for two weeks.

And it came a little over six weeks after President Trump abruptly fired Caine’s predecessor, Air Force Gen. Charles Q. Brown Jr., as part of a larger shakeup at the Pentagon that had many Democrats concerned. Republicans, on the other hand, pushed for Caine to be confirmed quickly.

“The Chinese Communist Party continues an expansive military buildup, and our adversaries continue to band together against the United States,” Sen. Roger Wicker, R-Miss., chair of the Senate Armed Services Committee, said in a statement on Wednesday. “President Trump should have the expertise of the highest-ranking military officer in place without any delays.”

Caine’s confirmation makes him the nation’s highest-ranking military officer, principal military adviser to the president, secretary of defense and National Security Council.

Caine is a career fighter jet pilot who patrolled the skies above Washington, D.C., immediately after the 9/11 attacks, served in the Middle East during the fight against the Islamic State and then worked at the CIA.

Despite his 34 years of military experience, Caine had not served in any of the roles legally required to become Joint Chiefs chair. The president, however, can waive those requirements if he “determines such action is necessary in the national interest.”

Caine was not well known before his nomination in February. Several officials on Capitol Hill and the Pentagon, granted anonymity as they were not authorized to speak publicly on the matter, told NPR at the time that they had to Google his name.

At his confirmation hearing earlier this month, Caine said he hoped to earn senators’ trust “and the trust of the American people.”

“If confirmed, I’ll continue the traditions and standards of my oath of office and my commission as a nonpartisan leader who will always strive to do the right thing,” he said.

Caine’s career spanned the CIA, the National Guard and the Air Force 

Caine served most recently as the associate director for military affairs at the CIA, a position he held from November 2021 until his retirement in December 2024. 

Caine had to be reinstated to active service and promoted to four-star general to become chair, the Washington Post reports. 

In 1990, Caine was commissioned through an ROTC program at the Virginia Military Institute in Lexington, Va. While on active duty, Caine primarily served as an F-16 fighter pilot, flying more than 150 combat hours, according to his military biography.

On Sept. 11, 2001, he was one of the pilots who protected the skies above Washington following the terrorist attacks. It marked the first time that fighter jets were deployed over the nation’s capital.

“I remember telling the wingman that I was going to fly with that day, ‘Don’t shoot anybody. I’ll make the decision,’ because I was very mindful that if we made a mistake or if we got it wrong or if we missed somebody and we did not shoot, the consequences of that could be catastrophic,” he said in a 2023 CIA video. “Not only for the people on the ground, but for the country as a whole.”

From 2009 to 2016, Caine also served in the National Guard. He was deputy commander in the U.S. campaign against ISIS in Iraq and Syria between May 2018 and September 2019, according to his military biography.

The biography also describes him as a “serial entrepreneur and investor.”

According to his LinkedIn profile, Caine serves on the advisory board of several venture capital firms, as well as the defense and space exploration company Voyager.

Trump has been talking up Caine since at least 2019

In 2019, at the Conservative Political Action Conference, Trump shared his first meeting with Caine in Iraq, where the general introduced himself by his nickname “Razin.”

“‘Raisin, like the fruit?’ He goes, ‘Yes, sir, Razin.’ ‘What’s your last name?’ ‘Caine. Razin Caine.’ I said, ‘You got to be kidding me,’ ” Trump recalled.

According to Trump, the general suggested the Islamic State could be defeated in a week. “One week? I was told two years,” Trump said he asked. Caine explained that the issue was that his orders come from D.C. rather than being informed by the field.

“You’re the first one to ask us our opinion,” Caine told Trump, as the president recalled. “So I went back and I said, ‘I’m going to get back to you soon, Razin. I think you’re great,’” Trump said. “I like you, Razin Caine.”

Trump referred to this encounter in Iraq again at last year’s CPAC. But in this retelling, Caine asserted that the Islamic State could be defeated in four weeks, not one.

Trump then recalled the general saying, “‘I love you, sir. I think you’re great, sir. I’ll kill for you, sir.’ “

Some U.S. officials who were not authorized to speak publicly, and are familiar with the exchange, say that remark never happened.

Trump also claimed that Caine wore a “Make America Great Again” hat when they first met, a story Caine has since disputed. 

“For 34 years, I’ve upheld my oath of office and my commitment to my commission, and I have never worn any political merchandise,” he said during his hearing.

Caine says he won’t be a yes man

Caine was nominated days after Trump fired Brown, the previous Joint Chiefs chairman who was picked by former President Joe Biden in 2023. The job has traditionally had a four-year term. 

Brown was accused of supporting a “woke” agenda by Defense Secretary Pete Hegseth. In his book The War on Warriors, Hegseth questioned whether Brown, who is Black, got the job because of his race.

At the time, Hegseth went on Fox News Sunday and said Brown was “an honorable man,” but “not the right man for the moment.”

“The president respects leaders who untie the hands of warfighters in a very dangerous world,” Hegseth said. “I think Dan Caine is the man to meet the moment.”

Hegseth went on to fire several other top Pentagon officials, including Adm. Lisa Franchetti, chief of naval operations (and the first woman to lead the Navy); Gen. Jim Slife, vice chief of the Air Force; and the judge advocates general for the military services. 

Critics — including Democratic lawmakers and retired military officials — decried the firings as destabilizing and unjustified, noting they seemed to target officers who had supported diversity, equity and inclusion efforts. 

The shakeup stoked wider fears of politicization of the Department of Defense, which came up at Caine’s confirmation hearing.

When asked whether he would “stand up and push back” if Trump ever asked him to use the military to do something unconstitutional, Caine answered affirmatively.

“I think that’s the duty and job that I have, yes,” he said. 

A version of this story originally published in February.