Trump's tariffs kept Fed from cutting rates, Jerome Powell says

The Federal Reserve would have cut interest rates by now if President Donald Trump's tariffs weren't so substantial, central bank chief Jerome Powell said Tuesday

The Federal Reserve would have cut interest rates by now if President Donald Trump's tariffs weren't so substantial, central bank chief Jerome Powell said Tuesday.

Trump’s ever-changing tariff agenda has caused months of deep uncertainty for global markets and businesses. Many have struggled to make predictions and plan ahead for duties that have shifted, sometimes with no warning other than social media posts by the president.

“Chair, would the Fed have cut [rates] more by now if it weren’t for the tariffs?” Bloomberg News anchor Francine Lacqua asked Powell at the European Central Bank’s annual forum in Sintra, Portugal.

“So I do think that’s right,” Powell responded. “In effect, we went on hold when we saw the size of the tariffs, and essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs. We didn’t overreact. In fact, we didn’t react at all; we’re simply taking some time.”

The Fed chair's comments underscored a stance he has stuck to despite unrelenting, norm-shattering attacks by Trump and his top allies urging the central bank to lower interest rates. The pressure campaign has led Powell to repeatedly defend the central bank's independence from political influence — a position the Supreme Court appeared to bolster in a ruling last month — along with the decision to hold rates steady.