Federal Reserve Chair Jerome Powell is opting for a prudent pause, asserting that the Fed will wait to fully understand the impact of tariffs on US prices before making any moves on interest rates. This cautious approach directly contradicts Donald Trump’s renewed demands for immediate rate cuts to spur economic growth.
In an overnight social media post, Trump launched a personal attack on Powell, calling him “very dumb” and claiming the Fed’s refusal to lower rates since December – partly due to uncertainty sparked by his own administration’s erratic economic strategy – was damaging the US. Trump wrote, “We will be paying for his incompetence for many years to come.” Powell, however, maintains the Fed’s independence.
On Capitol Hill, Powell reiterated that Trump’s tariffs were “likely” to increase prices – potentially challenging the Fed’s years-long effort to bring down US inflation. He noted, however, that the administration’s policies frequently shift. “Policy changes continue to evolve, and their effects on the economy remain uncertain,” Powell told the US House of Representatives financial services committee.
Powell, whom Trump appointed as Fed chair during his first stint in the White House, stressed he was open to the prospect of the inflationary impact of tariffs being less severe than expected. He emphasized the Fed’s “obligation” to “keep longer-term inflation expectations well anchored and to prevent a one-time increase in the price level from becoming an ongoing inflation problem.”
Powell’s Prudent Pause: Fed Waits on Tariffs Before Rate Moves
