Jerome Powell Confirms Fed Would Have Cut Rates If Not for Trump’s Tariff Policy

Federal Reserve Chair Jerome Powell confirmed Tuesday that the U.S. central bank would likely have cut interest rates by now—if not for former President Donald Trump’s tariff policies.

During a panel discussion at the European Central Bank Forum in Sintra, Portugal, Powell was asked whether the Fed would have reduced interest rates in 2025 had Trump not proposed additional import tariffs earlier this year. Powell responded, “I think that’s right.”

“Effectively, we went on hold when we saw the size of the tariffs,” Powell said. “Essentially all U.S. inflation forecasts increased materially as a consequence of those tariffs.”

Fed on Hold Despite Political Pressure

Powell’s statement comes as the Federal Reserve holds interest rates steady, even amid pressure from political leaders and financial markets.

Last month, the Federal Open Market Committee (FOMC) left the benchmark interest rate unchanged at 4.25% to 4.5%, where it has stood since December. The Fed’s “dot plot” projections suggest two rate cuts could come by the end of 2025, but Powell emphasized a cautious, data-dependent approach.

When asked if a rate cut could come as soon as July, Powell said, “I really can’t say—it’s going to depend on the data.” According to the CME FedWatch Tool, there is a 76% chance the Fed will hold rates steady at its next meeting.

“We are going meeting by meeting,” Powell said. “I wouldn’t rule any meeting in or out—it’s all about how the data evolve.”

Trump’s Criticism and Powell’s Future at the Fed

The Fed’s decision to keep rates unchanged has drawn public criticism from Donald Trump, who has accused Powell of failing to lower borrowing costs.

Trump recently called Powell “terrible” and a “very average mentally person.” When asked whether he would remain as a Federal Reserve Governor after his term as Chair ends in 2026, Powell said, “I have nothing for you on that today.” (His term as a Fed Governor extends to 2028.)

Trade Policy and Market Uncertainty

The topic of Trump’s tariff policy and its impact on global markets dominated Tuesday’s panel. Powell appeared alongside other central bank leaders from around the world, fielding questions about the implications of U.S. trade policy and the future of global economic cooperation.

Trump initially introduced steep tariff proposals in April, which were later partially rolled back after financial markets reacted negatively. While the S&P 500 has since recovered and reached new record highs, investors and central banks remain cautious.

There is ongoing concern about the long-term impact of trade disputes on global economic growth, corporate earnings, and market stability.

Powell’s Focus: Economic Stability

Despite the political noise, Powell reaffirmed the Fed’s commitment to its dual mandate: maintaining price stability and achieving maximum employment.

“All I want—and all anybody at the Fed wants—is to deliver an economy that has price stability, maximum employment, and financial stability,” Powell said.
“What keeps me up at night is: how do we get that done? I want to hand over to my successor an economy in good shape.”

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