Jerome Powell Asks 'Who's Going To Pay For The Tariffs?' Amid Pressure From Trump To Cut Rates

Federal Reserve Chair Jerome Powell on Wednesday said the central bank is still trying to understand the full impact of President Donald Trump’s tariffs on inflation, before it takes a call on interest rates.

During his testimony before the Senate Banking Committee, Powell continued to point to the uncertainty surrounding the impact of tariffs.

“The question is, who’s going to pay for the tariffs?” he asked.

He explained that the impact of tariffs has not been seen in prices of goods yet, but that could change going forward.

“How much of it does show up in inflation? And honestly, it’s very hard to predict that in advance.”

This is consistent with Powell’s testimony on Tuesday, the Fed’s report earlier this month, and its rationale for keeping key borrowing rates unchanged in the 4.25% to 4.5% range.

Earlier on Tuesday, President Trump lashed out at Powell ahead of the Fed Chair’s testimony in Congress.

“I hope Congress really works this very dumb, hardheaded person,” the President said in a post on Truth Social.

Even prior to the June meeting, the Fed and Powell had maintained a wait-and-watch approach, but some members of the Federal Reserve’s Board of Governors have struck a different note recently.

Federal Reserve Governors Christopher Waller and Michelle Bowman took a contrary stance, citing labor market weakness as the primary reason for their expectation of a cut in July.

“If you’re starting to worry about the downside risk labor market move now don’t wait. Why do we want to wait until we actually see a crash before we start cutting rates?” Waller said.

However, Atlanta Federal Reserve President Raphael Bostic supported Powell, calling for patience to see how businesses adjust to President Trump’s tariff policies.

Meanwhile, U.S. equities edged lower on Wednesday despite positive developments at the NATO summit.

At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down 0.1%, while the Invesco QQQ Trust (QQQ) gained 0.04%. Stocktwits data shows retail sentiment around the S&P 500 ETF has been in the ‘extremely bearish’ territory over the past week.

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