Catenaa, Tuesday, June 24, 2025- Federal Reserve Chair Jerome Powell said on Tuesday that it is well-positioned to wait on any interest rate cuts until it gains clarity on the inflation impact from Trump tariffs.
“For the time being, we are well-positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance,” Powell said before the Committee on Financial Services.
He said policy changes continue to evolve, and their effects on the economy remain uncertain, and that the effects of tariffs will depend on their ultimate level, while Expectations of that level, which reached a peak in April and have since declined.
“Even so, increases in tariffs this year are likely to push up prices and weigh on economic activity,” he said.
Earlier, President Donald Trump said that interest rates should be lowered by at least two to three percentage points.
“We should be at least two to three points lower…if things later change to the negative, increase the Rate,” Trump said in a Truth Social post.
Powell also said that incoming data suggest that the economy remains solid. Following growth of 2.5% last year, GDP was reported to have edged down in the first quarter, reflecting swings in net exports that were driven by businesses bringing in imports ahead of potential tariffs.
He added that near-term measures of inflation expectations have moved up over recent months, as reflected in both market- and survey-based measures.
Respondents to surveys of consumers, businesses, and professional forecasters point to tariffs as the driving factor. Beyond the next year or so, however, most measures of longer-term expectations remain consistent with the Fed 2% inflation goal.
