Jerome Powell, chairman of the Federal Reserve System, told the legislators that the central bank was not in a hurry to reduce interest rates, as officials are waiting for the economic impact of President Donald Trump’s economic impact.
“The effects of tariffs will depend, among other things, to depend on their final level,” Powell told Tuesday’s notes in front of the congress panel. “For now, we are ready to wait for more about the probable course of the economy than we consider any adjustments to our political attitude.”
Powella notes before the House Financial Services Committee come to the Fed’s decision last week to leave interest rates unchanged in the range of 4.25%-4.5%.
“If it turns out that the inflation pressures remain contained, we will get to the place where we have reduced rates before later,” Powell said in response to the possibility of lowering the rate in July. “But I wouldn’t want to point out a specific meeting. I don’t think we have to be in a hurry, because the economy is still strong.”
Fed officials signaled last week that they prefer two cuts by the end of the year. Economists who asked Bloomberg expect a decrease in September.
However, Powell stressed that the uncertainty in the economic outlook meant that the wide set of results remained possible. If inflation came weaker than expected or worse market, he said the Fed could reduce rates earlier. He also added that higher than the expected inflation can push the Fed to maintain.
“Many ways are possible here,” Powell said.
He acknowledged that recent data supported the case of lower rates. He stressed, however, that the data was retroactively and many economists expect a “meaningful increase in inflation” this year due to tariffs.
“At this time, all prognostics expect some significant inflation to appear soon,” he said. “We can’t just ignore that.”
The revenues of the Ministry of Finance and the dollar decreased during the Powell testimony, as merchants were in slightly higher chances by the end of the year to at least two interest rates. They pointed to his comments on the potential to contribute less to inflation than prognostics currently expect. Powell’s appearance coincided with the release of the weaker than the expected consumer confidence meters for June, who also supported these betting.
The position of the central bank, held by Trump, who constantly demanded lower rates and claimed that the Fed maintained the cost of lending the US government high by holding stable rates.
“Jerome Powell of the Fed will be in Congress today to explain, among other things, why he refuses to reduce the rate,” Trump told social media soon on Tuesday. “I hope Congress really works with the very stupid, hard person, we will pay for his incompetence for many more years.”
Powell and several other politicians have pointed to increased economic uncertainty resulting from the increased use of Trump’s administration tariffs and other policy changes to justify stable rates. Many prognosticists expect tariffs to exert pressure on inflation and economic growth for detection, although these estimates carry significant uncertainty.
Trump has often shifted to the specifics of his customs policies and the administration says he is working on commercial agreements that could affect the nature and level of duties.
“The expectations of this level, and therefore related economic effects, have reached its peak in April and have since refused,” Powell said in his introductory statement, which largely reflected the notes he published last week. “Yet the increase in tariffs is likely to increase prices this year and consider economic activity.”
Powell said the impact of tariffs on inflation could be short -term or maybe persisted.
Avoiding the latter result “will depend on the size of the effects of tariffs, how long it takes for prices to go through and eventually maintain long -term inflation expectations,” he said.
So far, economic data have shown a limited impact of tariffs. Fed Governors Christopher Waller and Michelle Bowman pointed out this dynamics, among other things, in the Fed’s argument, which could reduce as soon as the next meeting in July in July.
Meanwhile, Powell described the overall economy and the labor market as solid. He said inflation was significantly alleviated from the maximum achieved in mid -2022, but was somewhat increased above 2% Fed’s goal. He added that next year most of the long -term expectations remain in line with the Fed’s inflation target next year.
(Tagstotranslate) Jerome Powell (T) Federal Reserve (T) Interest Rates (T) Trump Tariffs (T) RATE CUT Expertations (T) Jerome Powell at Congressional Testimony (T) Federal Reserve Chair Jerome Powell (T) Fed Interest Rate (T) Fed Interest On Hold
