Powell Not Rushing to Cut Rates as Fed Awaits Tariff Clarity

Federal Reserve Chair Jerome Powell will reiterate to lawmakers that the central bank is in no rush to cut interest rates as officials await further clarity on the economic impact of President Donald Trump’s tariffs. ‘The effects of the tariffs will depend, among other things, on their final level,’ Powell stated on Tuesday (June 24, 2025) in prepared remarks for delivery to Congress. ‘For now, we are in a good position to wait and learn more about the likely trajectory of the economy before examining potential adjustments to our policy stance.’ The testimony before the House Financial Services Committee follows last week’s decision by the Fed to leave rates unchanged at a range of 4.25% – 4.5%. The central bank’s wait-and-see approach has angered Trump, who has consistently called for lower rates, arguing that the Fed keeps borrowing costs too high for the U.S. government by maintaining steady rates. Meanwhile, Powell and several other policymakers have highlighted the increased economic uncertainty stemming from the administration’s enhanced use of tariffs and other policy changes to justify keeping rates steady for now. Many economists expect tariffs to exert upward pressure on inflation and hurt economic growth, though these estimates carry significant uncertainty. Trump has frequently shifted on tariff policy details, with his administration stating it is working on trade deals that could affect tariff levels. Powell noted that while tariff impacts on inflation might be short-lived, they could persist longer. Economic data so far shows limited tariff impact. Some Fed officials, like Christopher Waller and Michelle Bowman, have pointed to this dynamic, suggesting the Fed could cut rates as early as its next meeting in July. Meanwhile, Powell described overall economic and labor market conditions as stable, noting that inflation has significantly declined from mid-2022 peaks but remains slightly above the Fed’s 2% target.