The Federal Reserve could face the “challenging scenario” of rising inflation at the same time the U.S. labor market is weakening, Fed Chair Jerome Powell said Wednesday.

Federal Reserve Chair Jerome Powell expressed concern over achieving the central bank’s dual mandate as tariffs are likely to drive inflation higher while weakening economic growth. His comments added further pressure on US stock markets and the US dollar on Wednesday.

The economy will likely stumble as it adjusts to new trade policies announced by the Trump administration, Federal Reserve Chair Jerome Powell said Wednesday. But it’s unknown whether any inflationary effects will be long term or a one-time hit for businesses and consumers.