Powell says the Fed will say delayed interest rate cuts due to tariff inflation concerns
White House spokesman Caroline Leavitt said Monday during a press conference that President Donald Trump had sent a letter to Chairman Jerome Powell, who shows low interest rates in other countries.
Federal Reserve Chairperson Jerome Powell On Tuesday, the central bank said it had cut interest rates due to concerns over rising prices due to tariffs on consumers.
Powell participated in a panel discussion on monetary policy at the Portuguese European Central Bank Forum with leaders from other prominent central banks, including the European Union, the UK, Japan and South Korea.
Powell was asked if the Fed had ever lowered interest rates if the tariffs hadn’t been spurred Inflation concerns.
“I think so,” Powell said. “In fact, we were put on hold when the size of the tariffs and essentially all of the US inflation forecasts increased substantially as a result of the tariffs.”
Federal Reserve Chairman Jerome Powell said higher inflation forecasts after the tariff announcement caused a moratorium on interest rate cuts. (Photographer: Al Drago/Bloomberg via Getty Images)
“So we didn’t overreact. In fact, we didn’t respond at all. We’re not taking the time. As long as the US economy is in a solid form, I think the cautious thing is to wait and learn more and see what those effects are.
Early in the conversation, Powell said the US economy has approached the Fed’s 2% target in recent years, with the 4.2% unemployment rate being a sign of a healthy labor market.
“We ignored tariffs for a second. Inflation was just behaving exactly as we expected and we wanted it to happen,” Powell said.
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President Trump has repeatedly criticised Federal Reserve Speaker Powell. (Getty Images / Photo Illustration / Getty Illustration)
Powell went on to say the Fed expects a higher inflation measurement later this summer. Customs fees He said policymakers will monitor whether these impacts are greater or less than expected, but will go through the supply chain.
“We haven’t seen much of an effect from the tariffs yet. We hadn’t expected it before,” Powell said. “We’ve always said that the timing, volume and permanence of inflation is very uncertain and certainly proves it.”
“So we’re looking, so we’re hoping we’ll see some readings, higher readings over the summer. But we’re ready to know if it’s higher or lower than expected or earlier,” he added.
president Donald Trump He repeatedly criticised his demand that the central bank lowered interest rates to promote more economic activity, scorned his intelligence as “too late” and called him the “average mental person” for “having a low IQ for what he is doing.”
Trump nominated Powell as Fed Chairman in 2017, and his criticism of Powell’s handling of monetary policy dates back to his first term of office.
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President Trump appointed Jerome Powell as chairman of the Federal Reserve in 2017. (Saul Loeb/AFP via Getty Images/Getty Images)
The president sent a memo to Powell on Monday, saying that the central bank “sacrificed a lot of money to the United States” in order to not cut interest rates.
“We need to drop the rate significantly. We have hundreds of billions of dollars lost, and there is no inflation,” Trump wrote in a memo.
Leavitt added that Trump sent Powell a chart showing all countries in the world with benchmark rate targets lower than the Fed.
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Feeding Each of the four previous meetings in 2025 left a benchmark federal funding rate in the target range of 4.25% to 4.5%. The next meeting is scheduled for late July.