Powell confirms that the Fed would have cut by now were it not for tariffs

US Federal Reserve Chair Jerome Powell testifies during a House Financial Services Committee hearing on "The Federal Reserve's Semi-Annual Monetary Policy Report" on Capitol Hill in Washington, DC on June 24, 2025.

Federal Reserve Chair Jerome Powell said Tuesday that the U.S. central bank would have eased monetary policy by now if not for President Donald Trump's tariff plan.

When asked during a panel if the Fed would have lowered rates again this year had Trump not announced his controversial plan to impose higher levies on imported goods earlier this year, Powell said, "I think that's right."

"In effect, we went on hold when we saw the size of the tariffs and essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs," Powell said at European Central Bank forum in Sintra, Portugal.

Powell's admission comes as the Fed has entered a holding pattern on interest rates despite mounting pressure from the White House.

The Fed last month held the key borrowing rate steady once again, keeping fed funds at the same range between 4.25% and 4.5% where it's been since December.

The central bank's policy-setting Federal Open Market Committee indicated via its so-called dot plot of members' projections that there could be two cuts by the end of 2025. However, Powell also said at a press conference last month that the Fed was "well positioned" to remain in a wait-and-see mode.

On Tuesday, Powell was asked if July would be too soon for markets to expect a rate cut. He answered that that he "really can't say" and that "it's going to depend on the data." Fed funds futures traders are pricing in a more than 76% likelihood that the central bank once again holds rates steady at the July policy gathering, according to the CME FedWatch tool.

"We are going meeting by meeting," Powell said during Tuesday's panel. "I wouldn't take any meeting off the table or put it directly on the table. It's going to depend on how the data evolve."

The Fed's unrelenting position to keep rates where they are for now has caught the ire of Trump and his administration, who have publicly admonished Powell for the central bank's failure to lower borrowing costs. Trump last week called Powell "terrible" and said he was a "very average mentally person."

When asked on Tuesday if he would stay on as Fed governor after his term as chair ends next year, Powell responded, "I have nothing for you on that today." Powell's term as a Fed chair ends in 2026, while his position as governor is set to run into 2028.

Global trade policy and Trump's attacks on Powell took center stage at Tuesday's event, where the U.S. Fed chief was flanked on the panel by other leaders of central banks from around the globe. International central bank leaders fielded questions ranging from whether they'd act as Powell if they were in his shoes, to whether nations are breaking away from the U.S.

Trump's on again, off again tariff policy has put global markets and monetary policy makers on edge. The president first unveiled a plan for steep levies on imported goods in early April, before delaying many of the steepest tariffs shortly after when U.S. markets tumbled.

The U.S. stock market has more than regained losses recorded in the wake of Trump's initial announcement, with the S&P 500 hitting all-time highs in recent days for the first time since February. But investors and monetary policymakers still report feeling uncertain about the future of global trade and its impact on global economic growth, profits and stock markets.

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