Powell Defends Fed’s Strategy: Tariff Assessment Precedes Rate Cuts

Federal Reserve Chair Jerome Powell is defending the Fed’s strategy, asserting that a thorough tariff assessment must precede any interest rate cuts. This stance directly challenges Donald Trump’s renewed demands for immediate rate reductions to stimulate the economy.
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.”