Jerome Powell, Chair of the Federal Reserve, recently defended the decision to maintain current interest rates despite ongoing criticism from President Donald Trump. The Fed is adopting a cautious approach, opting to observe the impact of tariffs on U.S. prices before deciding on potential rate cuts. This stance has drawn the ire of President Trump, who has been vocal in his demands for rate reductions to stimulate economic growth. He has publicly criticized Powell, accusing him of incompetence and blaming the Fed’s decisions for harming the economy.
In a recent social media post, President Trump labeled Powell as “very dumb” and argued that the Fed’s resistance to lowering rates since December has been detrimental. This criticism comes amid the President’s own administration’s unpredictable economic strategies that have contributed to uncertainty.
Speaking on Capitol Hill, Powell acknowledged that tariffs are likely to increase prices, a potential challenge to the Federal Reserve’s ongoing efforts to manage inflation. He highlighted the fluid nature of the administration’s policies and their uncertain effects on the economy. Powell emphasized that tariff increases this year could push prices higher and impact economic activity.
Although Powell remains open to the possibility of tariffs having a less severe inflationary impact than anticipated, the Federal Reserve has yet to comment directly on tariff policies. At its latest meeting, the Fed opted to keep rates unchanged but hinted at the possibility of two cuts later this year. Officials raised their inflation projections while lowering growth estimates.
Powell reiterated the Fed’s responsibility to anchor long-term inflation expectations and prevent temporary price increases from evolving into sustained inflation problems. He stated that the central bank is currently positioned to observe economic developments before making any policy changes.
