Federal Reserve Chair Jerome Powell stated on Tuesday that the central bank would have already loosened monetary policy if it were not for President Donald Trump’s tariff initiatives.
During a panel discussion, Powell was directly asked whether the Fed would have cut interest rates again this year were it not for Trump’s earlier push to raise tariffs on imported goods. Powell responded, “I think that’s right,” acknowledging the significant influence trade policy uncertainty has wielded over the Fed’s decision-making.
His comments follow a period of policy pause by the Fed, which has left benchmark borrowing costs unchanged despite persistent pressure from Trump and his administration. The central bank most recently held rates steady last month, maintaining the federal funds target range at 4.25% to 4.5%, where it has stood since December 2024.
On Tuesday, Powell was questioned about the possibility of a rate cut as early as July. He declined to commit to a timeline, emphasizing, “I really can’t say,” and underscoring that any move would be dictated by incoming economic data. According to the CME FedWatch tool, futures traders currently assign over a 76% chance that policymakers will again leave rates unchanged at the Fed’s July meeting.
The Fed’s deliberate approach has drawn sharp criticism from Trump, who has repeatedly urged Powell to lower interest rates. As recently as last week, Trump labeled Powell “terrible” over the central bank’s refusal to ease borrowing costs.
