Appearance at U.S. House Hearing
"Uncertainty Over Economic Impact of Tariff Policy"
Despite Trump’s Pressure, "Well Positioned to Wait"
Jerome Powell, Chair of the U.S. Federal Reserve (Fed), stated on June 24 (local time) that he would not rush to cut interest rates until the impact of tariffs on the economy becomes clear. Despite repeated pressure from President Donald Trump to lower rates, Powell reaffirmed his cautious "wait-and-see" stance.
Powell appeared before the House Financial Services Committee of the U.S. Congress that day, saying, "Policy changes are still evolving, and their economic impact remains uncertain," and made it clear that the Fed would proceed carefully.
He said, "The effects of tariffs depend above all on their final level," adding, "We are in a good position to wait for more information on the economic outlook before considering any policy adjustments for the time being."
Previously, on June 18, the Fed unanimously decided to keep the benchmark interest rate unchanged at 4.25?4.5% at the regular Federal Open Market Committee (FOMC) meeting. The Fed noted that the possibility of stagflation?simultaneous inflation and economic slowdown?had increased. In a press conference immediately after the meeting, Powell emphasized that the Fed would maintain a cautious monetary easing policy until the economic effects of tariff policies and other factors became clearer.
Powell acknowledged that concerns over tariff policy had somewhat eased, but he still saw a possibility that tariffs could drive inflation higher. He said, "The outlook (concern) regarding the level of tariffs and their economic impact peaked in April and has since declined," but added, "Nevertheless, this year's tariff increases are likely to push up prices and put a burden on economic activity."
Powell projected that the Personal Consumption Expenditures (PCE) price index for May would rise by 2.3% year-on-year, and the core PCE price index would increase by 2.6%. These figures are slightly higher than those for April (2.1% and 2.5%, respectively). Based on the price indicators released so far, the actual impact of tariffs has been limited, but he did not rule out the possibility that inflationary pressures could rise again.
Powell also assessed that tariff-induced inflation could be temporary, but there is also a possibility that it could persist. He further emphasized that curbing price increases depends on "the scale of the tariff effect, the time it takes for prices to fully reflect it, and the ability to firmly anchor long-term inflation expectations."
He continued, "The FOMC's responsibility is to keep long-term inflation expectations stable and to ensure that temporary price increases do not turn into a persistent inflation problem," stressing, "Without price stability, it is impossible to achieve a strong and sustained job market that benefits all Americans."
Meanwhile, within the Fed, there are voices calling for a rate cut in July. Following Fed Governor Christopher Waller, Fed Vice Chair Michelle Bowman also indicated that she could support a rate cut next month if inflation remains subdued.
Meanwhile, prior to Powell's congressional appearance, President Donald Trump once again publicly criticized Powell early that morning. On his social networking service, Truth Social, Trump wrote, "Jerome Powell of the 'too late' Fed will appear before Congress today to explain why he is refusing to cut rates," adding, "I hope Congress deals with this stubborn and foolish man properly. We will pay the price for his incompetence for years to come."
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