Sintra, Portugal — Federal Reserve Chairman Jerome Powell indicated Tuesday that the U.S. central bank might have already implemented interest rate cuts if not for the significant uncertainty stemming from President Donald Trump’s tariff policies. Speaking at the European Central Bank’s annual forum, Powell addressed the ongoing complexities that Trump’s fluctuating tariff agenda has created for both global markets and American businesses.
The unpredictable nature of these tariffs has left many companies struggling to formulate strategies, as rates have shifted without much notice, often communicated through social media updates from the president. When asked whether the Fed would have made additional cuts in response to economic conditions without the tariffs, Powell acknowledged, “I do think that’s right,” suggesting the tariffs have significantly influenced the Fed’s reserve actions.
Powell elaborated that the simple reality of the tariffs has caused a recalibration of inflation forecasts in the U.S. economy, which, in turn, led the Fed to adopt a wait-and-see approach. “We’re simply taking some time,” he said, emphasizing the uncertainty surrounding the tariffs’ timing and potential economic impact.
Despite persistent criticism from Trump and his allies pushing for more aggressive action, Powell reiterated the importance of the Fed’s independence. The central bank’s authority was reinforced by a recent Supreme Court ruling, which Powell viewed as beneficial to the institution’s autonomy. “The prudent thing to do is to wait and learn more,” he said, underlining the Fed’s cautious approach given that the effects of tariffs have yet to materialize as anticipated.
While Powell declined to speculate on a possible rate cut in July, he stated that future decisions would hinge on incoming economic data. In a press conference in Florida, Trump continued to voice his dissatisfaction with the Fed, arguing that leadership should be reevaluated. His remarks included disparaging comments about Powell, referring to him as “a moron,” drawing both ire and empathy from various quarters.
Responding to these personal attacks, Powell maintained his focus on his core responsibilities: ensuring price stability and achieving full employment, key components of the central bank’s dual mandate. His remarks prompted applause from attendees at the ECB conference, signaling support for his measured approach amidst political pressures.
Further intensifying his critique, Trump labeled the Fed’s interest rate committee as complicit in ineffective monetary policy, suggesting its members ought to feel “ashamed.” He proposed that rates should be materially lower, undermining the committee’s decision-making process, which involves extensive deliberation before voting on any adjustments.
Trump appointed Powell to his position as chair during his first presidential term and has also named board members who currently serve on the Federal Reserve’s governing body. As discussions about future appointments circulate, speculation arises that the Biden administration may seek to nominate someone for Powell’s position as chair ahead of the 2026 expiration of his term.
When discussing his future role with the Fed, Powell expressed his desire to ensure stability in the economy for his successor. “I want to hand over to my successor an economy in good shape,” he stated, highlighting his commitment to the central bank’s mission as he approaches the end of his term as chairman.