Jerome Powell Says Fed Would Have Cut Rates By Now If Not For Trump’s Tariffs

Federal Reserve Chair Jerome Powell on Tuesday confirmed that the Federal Reserve would have cut interest rates by now if not for President Donald Trump’s tariffs.

During a panel discussion on Tuesday at the European Central Bank forum in Sintra, Portugal, Powell said President Trump’s tariff policies threw a wrench in the central bank’s inflation estimates, reiterating his previous stance that the levies were larger than expected.

“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, according to a CNBC report.

Meanwhile, U.S. equities edged lower on Tuesday, starting the second half of 2025 on a weak note.

At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down 0.15%, while the Invesco QQQ Trust (QQQ) fell 0.95%. Stocktwits data shows retail sentiment around the S&P 500 ETF has been in the ‘neutral’ territory over the past week.

This comes amid growing tensions between the President and Fed Chair over the rate policy. In June, Trump expressed his disdain for Powell, berating him in public again amid an ongoing disagreement over interest rates.

President Trump also revealed that he is considering a few candidates to replace Powell as the next Federal Reserve Chair.

“I know within three or four people,” said President Trump while addressing reporters during a press conference in The Hague.

Trump’s latest criticism of Powell comes after the Fed Chair questioned who would pay for the President’s tariff policies, implying that inflation would heat up eventually.

“The question is, who’s going to pay for the tariffs? How much of it does show up in inflation? And honestly, it’s very hard to predict that in advance,” he said.

Despite Powell being his pick, Trump has repeatedly called out the Fed Chair during his current term for not lowering interest rates.

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