Powell Stresses Patience on Rates Amid Tariff Uncertainty

Federal Reserve Chair Jerome Powell informed lawmakers that the central bank requires additional time to determine the inflationary effects of rising tariffs before making any interest rate adjustments.

Powell revealed to the House Financial Services Committee that the current tariffs will increase prices while reducing economic performance. The duration and extent of this impact remain uncertain to him.

The current situation allows us to maintain our position according to Powell who showed no rush to modify our policy. The market reacted to his statements by lowering July rate cut expectations while moving their attention toward September as a potential time for reduction.

The Federal Reserve maintained its interest rates at 4.25%–4.5% during the last week and indicated two quarter-point rate reductions will occur later in the year. The two Trump-appointed governors hold different views about rate cuts with two supporting early reductions but others maintaining their focus on future inflation concerns.

The upcoming end of his term has not stopped Trump from applying increasing pressure on Powell to lower interest rates. The Fed maintains its independence according to Powell who requires clear information about tariffs and economic data before making any monetary policy changes.