Federal Reserve Chair Powell delays rate cuts, monitors inflation and tariff impacts

From Yahoo Finance: 2025-06-24 08:37:00

Federal Reserve Chair Jerome Powell informed Congress that higher tariffs could lead to increased inflation starting this summer. Despite pressure from President Trump to cut rates, Powell emphasized waiting to see how inflation develops, citing a strong labor market and uncertainty about tariff impacts. Powell expects inflation to rise over the year.

Powell stated that the Fed is not rushing to cut rates and will assess inflation pressures before making any decisions. He emphasized the importance of monitoring tariff-driven price increases and their impact on consumers. Powell mentioned that rate cuts could be considered if inflation remains contained.

Investors adjusted their expectations following Powell’s testimony, reducing the likelihood of a rate cut in July and increasing it for September. Fed officials recently voted to keep interest rates steady, with projections suggesting two rate cuts by the end of the year. Trump has called for significant rate cuts in response to Powell’s cautious approach.

Trump, who appointed Powell, has criticized him for not cutting rates, calling him “dumb” and “hardheaded.” Powell reiterated that the Fed’s focus is on managing inflation, not commenting on trade policies. The central bank will continue to assess economic conditions before adjusting its policy stance.

Read more: Powell repeats rate cuts can wait as Fed studies tariff impacts