Powell Maintains Cautious Rate Stance as White House Pressures Fed for Cuts
Federal Reserve Chair Jerome Powell reiterated his cautious approach to interest rate policy on Tuesday, maintaining the central bank’s “wait and see” stance despite mounting criticism from President Donald Trump, who continues to press for immediate rate cuts, PBS News reports.
Speaking at a European Central Bank forum in Sintra, Portugal, Powell signaled that the Fed will keep its benchmark rate on hold for now as it assesses the economic impact of the Trump administration’s latest round of tariffs. He noted that while inflation may rise later this summer, the full effects of the trade duties remain uncertain.
“As long as the economy is in solid shape, we think the prudent thing to do is to wait and see what those effects might be,” Powell said.
Powell’s comments underline the ongoing tension between the independent central bank and the White House, which has repeatedly urged lower borrowing costs. President Trump argues that rate cuts would reduce the government’s interest expenses and further stimulate economic growth. On Monday, Trump extended his criticism beyond Powell to include the entire Federal Reserve Board, stating:
“The board just sits there and watches, so they are equally to blame.”
Despite the pressure, Powell emphasized the Fed’s independence and data-driven approach, noting that without the added uncertainty from tariffs, the central bank might already be lowering rates. But given the potential for inflation to rise, the Fed has opted to pause rate changes while it observes the situation more closely.
At the same time, Powell did not rule out future rate cuts, including at the Fed’s next policy meeting scheduled for July 29–30.
“I wouldn’t take any meeting off the table or put it directly on the table,” he said.
Some members of the Federal Reserve Board have indicated greater openness to rate cuts. Governors Christopher Waller and Michelle Bowman, both appointed by Trump, have recently said that they don’t expect tariffs to cause lasting inflation and that they may support a rate cut as early as July.
The Fed’s current key interest rate stands at 4.3%, unchanged so far in 2025 after a series of cuts in 2024. At a press conference last month, Powell said the central bank would “learn a great deal more over the summer” about how the tariffs might affect inflation, implying that no rate decisions would be made before September. However, signals from individual board members suggest the July meeting remains a live possibility.
Although Trump cannot remove Powell from his position — a point recently reaffirmed by the US Supreme Court — his ongoing criticism has raised concerns about the Fed’s independence. So far, financial markets have largely shrugged off the political pressure, focusing instead on economic indicators and official Fed statements.
