Federal Reserve Chair Jerome Powell stated that President Trump’s tariffs create a “highly uncertain” economic path, warranting a cautious approach to cutting interest rates. The uncertainty surrounding tariff inflation makes it challenging for the central bank to predict its impact on consumers.
The Fed left interest rates unchanged last week, despite President Trump’s pressure for faster cuts to boost the economy. Powell cited low employment, growing wages, and “decent” economic growth as reasons to maintain borrowing costs. He also emphasized that professional forecasters expect a significant increase in inflation this year, which supports the current monetary policy stance.
Powell noted that some businesses are still working through inventory levels from before tariffs took effect, making it essential to monitor summer data for signs of consumer price changes. The president has been vocal in his criticism of Powell, calling him “very dumb and hardheaded.”
Some Fed governors have expressed openness to more rapid interest rate cuts, with Christopher Waller and Michelle Bowman suggesting consideration as early as their next meeting in July. However, the central bank’s primary goal is to balance maintaining stable prices and maximum employment.
The Fed is also monitoring the effects of President Trump’s policies on taxes, immigration, and regulation, which can impact the economy. Tax cuts and deregulatory moves have the potential to boost economic growth, while strict border controls and large-scale deportations could hinder businesses’ ability to find workers.
Source: https://www.npr.org/2025/06/24/nx-s1-5442665/federal-reserve-powell-economy-interest-rates-tariffs