Powell Stands By Data: Fed Awaits Tariff Clarity Before Rate Decisions

Federal Reserve Chair Jerome Powell is standing by a data-driven approach, asserting that the Fed must await clearer data on tariffs’ impact before making interest rate decisions. This position directly challenges Donald Trump’s repeated calls for immediate rate cuts and his personal attacks on Powell.
Trump’s latest social media tirade branded Powell “very dumb” and accused the Fed of “incompetence” for not cutting rates since December. He claimed this inaction, partly linked to the instability of his own administration’s economic strategies, would inflict long-term economic harm. Powell, however, emphasizes the Fed’s crucial role in maintaining economic stability.
Appearing before the US House of Representatives financial services committee, Powell stated that Trump’s tariffs are “likely” to push up prices, potentially complicating the Fed’s efforts to control US inflation. He acknowledged the unpredictable nature of the administration’s policy changes, noting that their economic effects are still evolving. The Fed chair indicated that predictions about tariff levels and their associated economic consequences reached their highest point in April but have since declined.
Powell stressed the importance of the central bank’s commitment to “keep longer-term inflation expectations well anchored.” He stated that the Fed is in a strong position to observe and learn more about the economic trajectory before considering any modifications to its current policy stance. The Fed’s recent meeting saw rates remain unchanged, with officials hinting at potential future cuts while raising inflation forecasts.