Jerome Powell throws cold water on a rate cut in July

It’s still too soon for the Federal Reserve to consider lowering interest rates, Chair Jerome Powell said Tuesday.

It’s still too soon for the Federal Reserve to consider lowering interest rates, Chair Jerome Powell said Tuesday. “Policy changes continue to evolve, and their effects on the economy remain uncertain,” Powell said in his prepared testimony for his semiannual monetary policy report to Congress. “For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance.” Powell’s latest comments come as some Fed officials have joined President Donald Trump in calling for lower borrowing costs. The Fed leader said Trump’s tariffs are bound to have some impact on the economy, the extent of which remains to be seen. “The effects on inflation could be short lived — reflecting a one-time shift in the price level. It is also possible that the inflationary effects could instead be more persistent,” Powell said. Fed officials have floated the possibility of tariff-driven inflation being “temporary,” or just a one-time increase — a situation reminiscent of inflation’s eruption after the pandemic, when officials said price hikes would be “transitory.” That proved to not be the case. Fed officials have kept their benchmark lending rate unchanged since January — at a range of 4.25% to 4.5% — saying they want to see how Trump’s significant policy changes show up in economic data first before resuming rate cuts. Late last year, the Fed slashed its key interest rate a full percentage point after it kept it elevated at a bruising two-decade high for more than a year.