Powell says Fed would have cut rates further this year if not for tariffs

Federal Reserve Chair Jerome Powell

Federal Reserve Chair Jerome Powell said on Tuesday that the US central bank would have delivered deeper interest rate cuts this year if not for President Donald Trump’s expansion of tariffs.

Speaking at the annual European Central Bank Forum on Central Banking in Portugal, Powell said the Fed suspended its internal discussions on more aggressive rate cuts after assessing the scale of the tariffs, which drove up nearly all inflation expectations in the US.

He added that the impact of the tariffs is expected to show up in inflation data in the coming months, while acknowledging that uncertainty remains high.

Policymakers are now watching closely to determine whether the impact is larger or smaller, or whether it appears earlier or later than anticipated.

In its June policy meeting, the Fed’s quarterly projections indicated two potential rate cuts this year, each by 25 basis points, in line with forecasts made in March.