Federal Reserve Chair Jerome Powell has begun speaking about the Fed’s policy stance at an ECB forum in Sintra, Portugal, where he said that tariffs are causing the central bank to take its time before cutting interest rates.
When asked if the Fed would have cut interest rates by more by now if it weren’t for higher tariffs, Powell stated, “I think that’s right.”
“In effect, we went on hold when we saw the size of the tariffs,” Powell continued. “Essentially, all inflation forecasts for the United States went up materially as a consequence of the tariffs.”
Powell noted that the US economy remains healthy overall but that he expects to see the effects of tariffs filter through the economic data in the coming months. In recent days, Powell has faced increased pressure, including in the form of handwritten notes, from President Trump to lower interest rates.
“Ignore the tariffs for a second,” Powell said of the economy. “Inflation is behaving pretty much exactly as we have expected and hoped that it would. We haven’t seen effects much yet from tariffs, and we didn’t expect to by now.”
Watch Powell speak live below: