Media: https://media2.giphy.com/media/v1.Y2lkPTcyYTQ4YTRmMmVibGszaTd0aDBzc29hdWxtd3ZjZG12cjVhb3BtMjdob3M3ZWd1biZlcD12MV9naWZzX3NlYXJjaCZjdD1n/zQQENl8lOb7xVz5MIe/giphy.gifTitle: Fed Chair Jerome Powell’s Cautious Approach to Rate Cuts Amid Tariff Uncertainty
In recent testimony before the House Financial Services Committee, Federal Reserve Chairman Jerome Powell emphasized that President Trump’s tariffs create a “highly uncertain” path for the US economy. This uncertainty warrants the central bank’s wait-and-see approach to cutting interest rates. While acknowledging potential inflation due to tariff impacts on consumer prices, Powell expressed caution in predicting how much of this will be passed through to consumers.
The Fed last week maintained its stance on keeping interest rates unchanged despite President Trump’s calls for faster rate cuts. The central bank cited low employment, growing wages, and “decent” economic growth as reasons not to ease borrowing costs at the moment. In his semi-annual report to Congress, Powell reaffirmed this position when asked why the Fed has not followed the European Central Bank’s pace of rate cuts. He pointed out that professional forecasters expect a meaningful increase in inflation over the course of the year.
Powell also noted that some businesses may still be working through inventories shipped before tariffs were implemented, suggesting that summer data will provide insights into how much consumer prices are affected by these new trade policies. The potential implications of this situation include increased uncertainty for businesses and consumers alike as they navigate an unpredictable economic landscape.
From a historical perspective, this cautious approach to rate cuts reflects the Fed’s commitment to maintaining stability in the economy amidst external pressures such as tariffs. As we move forward, it will be interesting to see how these policies impact inflation rates and consumer spending habits. In terms of significance, Powell’s testimony underscores the importance of considering all factors when making economic decisions – especially those beyond our control like international trade disputes.
In conclusion, while there is undoubtedly some uncertainty surrounding President Trump’s tariffs and their potential impact on inflation rates, Fed Chair Jerome Powell’s measured response highlights the need for careful consideration before implementing any changes to interest rates or monetary policy. Only time will tell how these developments play out in the long run; however, it is clear that both businesses and consumers must remain vigilant as they navigate this complex economic landscape.
Source: [Original Article](https://www.npr.org/2025/06/24/nx-s1-5442665/federal-reserve-powell-economy-interest-rates-tariffs) #chair
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