The Fed cut rates three times late last year to about 4.3%. Yet since then it has put rate cuts on pause out of concern that Trump’s tariffs could push up inflation.
The Fed’s cautious approach stands in contrast to growing pressure from both the White House and some policymakers who are calling for rate cuts. US President Donald Trump has repeatedly criticised Powell and the Fed, accusing them of keeping interest rates too high and stifling growth.“Increases in tariffs this year are likely to push up prices and weigh on economic activity,” Powell said, adding that while the inflationary effects may be temporary, they could also persist depending on how the situation evolves.
Powell acknowledged during the hearing that a range of scenarios remain possible, including the need to reduce rates earlier if inflation stays weak or if the labour market shows signs of strain.President Trump has intensified his attacks on Powell in recent days and is pushing for a sharp reduction in interest rates.
In a social media post early Tuesday morning, Trump referred to Powell as “this very dumb, hardheaded person,” calling on Congress to hold him accountable. “We will be paying for his incompetence for many years to come,” he wrote.
Trump’s comments come despite the Fed holding rates steady at its last four meetings, amid signs of economic resilience in the US, but ongoing concerns over inflation, global uncertainty, and trade disruptions.
The president has slapped a 10% duty on all imports, along with an additional 30% levy on goods from China, 50% on steel and aluminum, and 25% on autos.
When asked whether two rate cuts were still likely this year as projected by some Fed officials, Powell declined to commit, noting that rate decisions will depend on how the economy evolves, which he described as “highly uncertain.”
With inputs from agencies
