Fed Chairman Powell's statement on interest rates

Powell spoke at the ECB Central Banking Forum organized by the European Central Bank (ECB) in Sintra, Portugal.

Powell said the U.S. economy is in a very good position, and noted that inflation is behaving as expected when tariffs are ignored.

Powell said that the impact of the tariffs has not yet been seen and that they expect higher inflation data throughout the summer.

Asked whether the Fed would have lowered interest rates further without the tariffs, Powell said, "I think that's true," noting that when they saw the magnitude of the tariffs and inflation expectations rose as a result of the tariffs, they took a stand.

Powell said they were not overreacting to the tariffs, adding, "As long as the U.S. economy is in good shape, we think the prudent thing to do is wait, get more information and see what those impacts might be. Those impacts haven't yet emerged, so we're waiting for now."

Powell said the vast majority of Federal Open Market Committee (FOMC) members think it would be appropriate to start lowering interest rates again later in the year, and that they will be monitoring data on inflation and the labor market.

Asked whether July was too early for a rate cut, Powell said, "I really can't say." He added that he would not take the possibility of a rate cut off the table at any meeting and that it would depend on how the data developed.

Powell said that this year was an important year and that there were important developments in 2025, adding, "I hope that we will remember this year as a year in which we successfully challenged some important economic changes."

When asked whether US President Donald Trump's personal attacks on her made her job harder, Powell emphasized that she was only focused on doing her job.

Pointing out the importance of using the tools at their disposal to achieve goals such as maximum employment, price stability and financial stability, Powell said, "That's what we're focusing on."

Powell noted that there are just over 10 months left in his term as Fed Chair, and noted:

"All I and everyone at the Fed wants is to deliver an economy with price stability, maximum employment and financial stability. How we do that is what keeps me up at night. I want to hand over an economy in good shape to my successor, and that's all my colleagues want."

"I don't have anything to say to you about that today," Powell said when asked if he would remain on the Fed board after his term ends.

AA