Defying Trump, Powell Puts Tariffs Under Microscope for Fed Rate Strategy

Defying renewed attacks from Donald Trump, Federal Reserve Chair Jerome Powell is placing the impact of tariffs under close scrutiny as a key factor in the Fed’s interest rate strategy. Powell insists the central bank needs to fully assess how tariffs affect US prices before considering any rate cuts, a move that directly contradicts Trump’s demands for immediate economic stimulus.
In a late-night social media post, Trump launched another personal attack, calling Powell “very dumb” and blaming the Fed’s “incompetence” for not lowering rates since December. Trump argued that this inaction, which he partly attributed to his own administration’s erratic economic policies, would be a long-term burden on the US. Powell, however, remains focused on the Fed’s independent mandate.
During his testimony on Capitol Hill, Powell reiterated that Trump’s tariffs are “likely” to increase prices, potentially making it harder for the Fed to achieve its inflation targets. He pointed out the frequent shifts in the administration’s policies and the resulting uncertainty regarding their economic impact. Powell noted that expectations for tariff levels and their economic effects peaked in April and have since receded.
Powell stressed the central bank’s “obligation” to ensure long-term inflation expectations remain stable and prevent temporary price increases from escalating into a persistent inflation problem. He concluded that the Fed is currently “well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance.”