Federal Reserve Chair Jerome Powell is signaling that the Fed won’t rush interest rate cuts, prioritizing the assessment of tariff fallout on US prices. This measured approach comes despite renewed demands from Donald Trump for immediate rate reductions to stimulate economic growth.
In an overnight social media post, Trump launched another attack on Powell, calling him “very dumb” and blaming the Fed’s “incompetence” for not lowering rates since December. Trump argued that this inaction, which he partly attributed to his own administration’s erratic economic policies, would be a long-term burden on the US. Powell, however, remains focused on the Fed’s independent mandate.
During his testimony on Capitol Hill, Powell reiterated that Trump’s tariffs are “likely” to increase prices, potentially making it harder for the Fed to achieve its inflation targets. He pointed out the frequent shifts in the administration’s policies and the resulting uncertainty regarding their economic impact. Powell noted that expectations for tariff levels and their economic effects peaked in April and have since receded.
Powell stressed the central bank’s “obligation” to ensure long-term inflation expectations remain stable and prevent temporary price increases from escalating into a persistent inflation problem. He concluded that the Fed is currently “well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance.”
84
previous post