Fed Chair Jerome Powell dodges Trump’s rate-cut demand
Federal Reserve Chair Jerome Powell engaged in a verbal battle with President Donald Trump, attributing the delay in interest rate cuts to the tariffs imposed by the president.
Powell, speaking at a central banking conference in Portugal, stated that the threat of a global trade war caused a pause in plans to reduce the key borrowing rate affecting Americans’ home loans and credit cards.
He mentioned, “We went on hold when we saw the size of the tariffs. All inflation forecasts for the United States went up materially as a consequence.”
Trump’s recent Liberation Day tariffs on multiple countries, including increased tariffs on China, have added to the economic tension.
Despite Trump’s pressure for immediate rate cuts, Powell reiterated the Fed’s decision to assess the impact of tariffs on inflation before making any changes.
Discussing his remaining tenure as chair, Powell expressed his intention to leave the economy in good shape for his successor, amid speculation about who might take over.
Powell’s comments reflect the delicate balance the Fed faces in navigating geopolitical risks and economic data to determine future rate adjustments.
Market reactions to Powell’s remarks fluctuated, with investors adjusting the probability of a July rate cut based on evolving economic indicators.
