Were it not for tariffs, the Federal Reserve would have already cut interest rates in 2025, chair Jerome Powell said on Tuesday at a conference of central bankers.
During an onstage interview at the European Central Bank Forum alongside the central bankers of England, Korea, Japan, and the European Union, Powell was asked if the uncertainty caused by the White House’s ongoing tariff regime had led the Fed to hold off on cutting interest rates. He responded: “I do think that.”
Since then the Fed has sat pat on making any decisions about interest rates. “We went on hold when we saw the size of the tariffs and where, and essentially all, all inflation forecasts for the United States went up materially as a consequence of the tariffs,” Powell said. “So we didn’t overreact it. In fact, we didn’t react at all.”
The Fed had closed 2024 with a series of interest rate cuts. However, it had paused that rate-cutting cycle at the start of this year. Since then at each FOMC meeting, Powell has reiterated the view that with the economic outlook so uncertain the Fed would wait to see what happened before lowering rates. The rampant uncertainty, which affected all market participants, not just the Fed, started when President Donald Trump announced his widespread and harsh tariff policy in early April. The new policy led to a stock market crash, caused bond yields to soar, and saw the dollar weaken. It also forced businesses into a holding pattern for any future investment plans, which risked exacerbating a recession.
“We think the prudent thing to do is to wait and learn more and see what those effects might be,” Powell said. “And again, they haven’t really shown up. So for now—we’re waiting.”
Powell’s comments point to a certain irony in the current situation of the U.S. economy. The pause in interest-rate cuts was due to heightened levels of uncertainty stemming from Trump’s tariff policy. At the same time, Trump is furious with Powell for not lowering interest rates. On Monday, the President renewed his attacks on Powell, posting a picture of a handwritten note that accused him of taking too long to lower rates. At the ECB Forum, Powell again declined to answer any questions about Trump’s comments, his typical response whenever asked.
A White House spokesperson did not immediately respond to a request for comment.
Powell did earn a show of solidarity from his peers for his reaction to Trump’s criticisms.
“I speak for all colleagues on the panel, I think we would do exactly the same thing as our colleague Jay Powell does,” said European Central Bank president Christine Lagarde.
Powell has about 10 months left in his term, which ends in May 2026. In that time, he said his top priority was delivering to his successor an economy that is “in good shape.”
“That’s all we ever want,” Powell said. “So that’s what keeps me awake at night: are we on a path to do that? And how do we get that done?”
Trump’s frustrations with Powell, which have regularly boiled over in public, shattered the longstanding practice of keeping the Federal Reserve apolitical. Since the 1970s it has been understood that Fed chairs didn’t comment on the White House policy, and the president didn’t tell the Fed where to set rates. Now that bargain has fallen apart—at least on the president’s side.
With Powell’s term coming to a close, the question of his successor has heated up. Trump has made clear he would like a Fed chair that will lower interest rates.
“If I think somebody’s going to keep the rates where they are, or whatever, I’m not going to put them in,” Trump said in the Oval Office last week. “I’m going to put somebody that wants to cut rates. There are a lot of them out there.”
On Tuesday Powell again declined to answer any questions about his own future at the Federal Reserve.
But the question did come up when the panelists were asked what advice they would give their potential successors. Powell highlighted what he considered to be the importance of the Fed operating a “completely non-political way.”
“We don’t take sides,” Powell said. “We don’t play one side against the other. We stay out of issues that are really not our bailiwick and we just focus on [economic stability for the benefit of all the people].”
Providing a strong, stable economy would benefit the public and lawmakers alike, he said.
“We’re trying to have it be so that the public lives their best economic lives and so elected policymakers can make the really important decisions in a stable environment,” Powell said. “That’s how I think about it.”
This story was originally featured on Fortune.com
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