The Federal Reserve would have cut interest rates by now if President Donald Trump’s tariffs weren’t so substantial, central bank chief Jerome Powell said Tuesday.
Trump’s ever-changing tariff agenda has caused months of deep uncertainty for global markets and businesses. Many have struggled to make predictions and plan ahead for duties that have shifted, sometimes with no warning other than social media posts by the president.
“Chair, would the Fed have cut [rates] more by now if it weren’t for the tariffs?” Bloomberg News anchor Francine Lacqua asked Powell at the European Central Bank’s annual forum in Sintra, Portugal.
“So I do think that’s right,” Powell responded. “In effect, we went on hold when we saw the size of the tariffs, and essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs. We didn’t overreact. In fact we didn’t react at all, we’re simply taking some time.”
The Fed chair’s comments underscored a stance he has stuck to despite unrelenting, norm-shattering attacks by Trump and his top allies urging the central bank to lower interest rates. The pressure campaign has led Powell to repeatedly defend the central bank’s independence from political influence — a position the Supreme Court appeared to bolster in a ruling last month — along with the decision to hold rates steady.
“As long as the U.S. economy is in solid shape, the prudent thing to do is to wait and learn more and see what the effect might be,” Powell said Tuesday. “We haven’t seen effects much from tariffs, and we didn’t expect to by now. We have always said the timing, amount and persistence would be highly uncertain.” He added that the import taxes’ ultimate impact on the economy could wind up being either greater or less than currently anticipated.
Hours after Powell’s remarks, Trump renewed his rebukes of him, telling reporters in Florida that “anybody” would be better than him as head of the central bank.
Powell declined to weigh in on the likelihood of a July rate cut: “It’s going to depend on the data.”
Asked about the impact of Trump’s insult-laden criticism, Powell said, “I’m very focused on just doing my job.” He said the only two things that matter to him and fellow rate-setting officials are full employment and price stability — the two sides of the Fed’s so-called “dual mandate.” The ECB conference attendees applauded his response.
Trump has expanded his attacks on Powell to the committee that sets interest rates, saying on Monday that its members should be “ashamed” of current U.S. monetary policy. “The Board just sits there and watches, so they are equally to blame. We should be paying 1% Interest, or better,” Trump posted on social media.
In fact, the Federal Open Market Committee members vote during each of their meetings on whether to adjust interest rates after spending a day deliberating. Afterward, many voting members often explain their rationale for supporting or opposing the committee’s decision, including in speeches or written papers.
Trump appointed Powell to lead the Fed during his first term in office. He also named two of its current board members, Michelle Bowman and Christopher Waller.
Asked in Sintra how she would handle political pressure akin to what Powell has faced, European Central Bank President Christine Lagarde said, “I think we would do exactly the same thing as our colleague Jay Powell does.” Other panelists, who included governors of the central banks of Korea and Japan, said they agreed with Lagarde, drawing further applause.
Last week, Treasury Secretary Scott Bessent said administration officials have discussed appointing the next Fed chair to the earliest board seat available. The term of Biden-appointee Adriana Kugler ends in January 2026, meaning “an October, November” nomination, according to Bessent.
Powell would not say Tuesday whether he planned to remain on the board of the Federal Reserve System after his term as chair ends in May 2025. He could remain as a board member until January 2028, if he chooses to.
“I want to hand over to my successor an economy in good shape,” Powell said.
