Federal Reserve Chair Jerome Powell told participants at the European Central Bank Forum in Sintra on 1 July 2025 that the US central bank is in a good position to wait for greater clarity on tariffs before adjusting its policy stance. Speaking at the annual gathering of central bank governors and economists, Powell offered no commitment to a specific rate timeline.
Powell said the Fed had in effect gone on hold when it saw the size of the tariffs, as essentially all inflation forecasts for the United States went up materially as a result.
TARIFFS AND THE POLICY OUTLOOK
Powell has argued on previous occasions that the appropriate monetary policy response depends on whether tariff-driven price increases prove transitory or feed through into persistent inflation expectations.
Powell indicated that the Fed does not need to be in a hurry, given that the labour market and broader economy have continued to function reasonably well in the face of trade-related uncertainty.
DUAL MANDATE IN FOCUS
Powell stressed that full employment and price stability are the Fed's only goals.
Powell declined to rule a July cut in or out, saying it would depend on the data, and acknowledged that the Fed would likely have cut rates already had it not been for the tariffs.
Bank news that matters, every weekday.
Follow The Global Banker on LinkedIn