Jerome Powell Postpones Interest Rate Cut, What is the Reason?
Federal Reserve Chair Jerome Powell stated that he will not cut interest rates, even though it has been directly ordered by President of the United States Donald Trump.
"I would really like to hear the argument why Powell cut interest rates by 50 basis points just before the election, but cannot do so now because inflation is lower," said U.S. Vice President JD Vance.
Powell said he does not follow Trump's orders, as the U.S. President imposed new import tariffs since February and plans to increase them further. The Fed is concerned that these tariffs will raise the prices of goods and trigger inflation again.
The leader of the U.S. central bank also mentioned that tariffs imposed since March have not yet impacted inflation, but are likely to be seen in the coming months. This is because the price increase process due to tariffs is slow and complex.
In addition, the unemployment rate remains low at 4.2%, indicating that the economy is still solid. Without signs of weakness in the labor market, the Fed feels there is no need to immediately cut interest rates.
Powell added that monetary policy should look forward, not just at current conditions. The Fed wants to wait for further certainty before taking significant steps.