Powell Blames Trump Tariffs for Delaying Rate Cuts 🇺🇸📉
At a key global banking conference in Portugal on July 1, 2025, U.S. Federal Reserve Chair Jerome Powell said rising tariffs under former President Donald Trump were a major reason interest rate cuts have been delayed. Powell explained that the unexpected inflation caused by Trump’s trade policies forced the Fed to hold off on easing, even as economic conditions seemed stable.
“We paused when we saw the impact of tariffs. Inflation expectations have jumped,” Powell told the European Central Bank panel.
Despite political pressure including Trump public criticism and threats to replace Powell he emphasised a data-driven, “meeting-by-meeting” approach to decisions. The Fed still projects two rate cuts later in 2025, but Powell warned that rising inflation and tariff risks could alter that.
The U.S. dollar has weakened significantly amid the uncertainty, while markets now see only an 11% chance of a rate cut in July and 63% by September. Globally, central banks in Europe and the UK are also facing challenges from inflation and weak growth.
Powell, whose term ends in 2026, aims to maintain stability before handing over leadership despite political tension and global economic headwinds.🌍💼
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