Economy Politics USA

Powell Says Fed Held Off Rate Cuts in 2025 Due to Tariff Uncertainty

Powell Says Fed Held Off Rate Cuts in 2025 Due to Tariff Uncertainty
Federal Reserve Chair Jerome Powell at the Senate Committee on Banking, Housing, and Urban Affairs on June 25 in Washington, DC (Kent Nishimura / Getty Images)
  • PublishedJuly 1, 2025

Federal Reserve Chair Jerome Powell said Tuesday that the central bank likely would have lowered interest rates this year if not for economic uncertainty stemming from President Donald Trump’s trade policy changes, particularly the imposition of new tariffs, CNN reports.

Speaking at a central banking conference in Sintra, Portugal, Powell responded affirmatively when asked whether rate cuts would have already occurred in the absence of the tariff-related developments.

“I do think that’s right,” he said.

So far in 2025, the Fed has kept interest rates steady, citing the potential inflationary effects of the tariffs and the need to assess their broader economic impact before adjusting monetary policy. Central bank officials have adopted a “wait-and-see” approach, even as calls for lower rates have intensified — especially from the White House.

President Trump has repeatedly criticized Powell for not lowering borrowing costs, characterizing him in harsh terms and blaming him for what he claims are missed economic opportunities. On Monday, Trump shared a handwritten note on social media accusing Powell of maintaining rates higher than those in many other countries and “costing the USA a fortune.” According to White House press secretary Karoline Leavitt, the note was also delivered directly to the Fed.

Despite political pressure, Powell has remained focused on a data-driven strategy.

“We’re trying to deliver macro stability, financial stability, economic stability for the benefit of all the people,” he said. “If we’re going to do that successfully, we need to do it in a completely non-political way.”

While some within the Fed — including Vice Chair for Supervision Michelle Bowman and Governor Christopher Waller — have indicated that rate cuts could be on the table as early as July, the majority view remains more cautious. Futures markets currently reflect an 81% probability that the Fed will hold rates steady at its next meeting on July 29–30.

Powell emphasized that most officials do anticipate lowering rates later in the year, contingent on developments in inflation and labor market conditions.

“A solid majority of (Fed officials) do expect that it will become appropriate later this year to begin to reduce rates again,” he said.

European Central Bank President Christine Lagarde, who appeared alongside Powell at the Sintra panel, publicly backed his approach and described him as a model of nonpartisan central banking. When asked how she would handle the type of criticism Powell has received, Lagarde replied:

“I think we would (all) do exactly the same thing as our colleague, Jay Powell, does.”

Powell, for his part, declined to respond directly to Trump’s latest remarks, reaffirming his commitment to staying above politics:

“I’m very focused on just doing my job.”

Joe Yans

Joe Yans is a 25-year-old journalist and interviewer based in Cheyenne, Wyoming. As a local news correspondent and an opinion section interviewer for Wyoming Star, Joe has covered a wide range of critical topics, including the Israel-Palestine war, the Russia-Ukraine conflict, the 2024 U.S. presidential election, and the 2025 LA wildfires. Beyond reporting, Joe has conducted in-depth interviews with prominent scholars from top US and international universities, bringing expert perspectives to complex global and domestic issues.