Powell tells Congress tariffs may delay cuts

Federal Reserve Chair Jerome Powell appeared before the House Financial Services Committee yesterday and told Congress that the central bank might have already resumed cutting interest rates if not for concerns over new tariffs.

Powell said he wants to see more data on June and July inflation to decide when the rates would be reduced. He emphasized that the new import tariffs, announced on April 2, could raise consumer prices, complicating the Fed’s ongoing effort to bring inflation back to its 2% target.

Uncertainty over the July decision
Although Powell did not specify if July will see a rate cut, his comments suggested the Fed will continue with its wait-and-see approach. “If inflation pressures remain contained, we will cut rates sooner rather than later,” he said.

Growing division within the Fed
At its last meeting, the central bank kept interest rates steady at 4.25%–4.5%. However, internal divisions are growing within the Fed. Some officials favor immediate cuts, while others want to wait.

Earlier this week, central bank official Michelle Bowman said that she favors a July rate cut, echoing Christopher Waller’s (another official) comments from last week when he said the Fed could be positioned to cut rates next month. President Donald Trump appointed both members.

Political pressure
Though the Federal Reserve is an independent body, President Trump has been publicly attacking Powell, calling him “hardheaded” and pushing for immediate cuts. But most lawmakers avoided echoing Trump’s criticism, signaling confidence in the Fed’s cautious approach.