Powell: Fed Waits on Interest Rates Amid Tariff Uncertainty

Federal Reserve Chair Jerome Powell announced that the central bank will maintain a wait-and-see approach on interest rate adjustments amid heightened uncertainty caused by President Trump's recent tariffs. Powell noted that the tariffs are significantly larger than anticipated and are expected to raise inflation and slow economic growth, though he believes some of these effects may be temporary. The Fed is unlikely to intervene unless there is a major malfunction in financial markets, despite ongoing volatility and investor speculation about potential rate cuts. There are differences within the Fed, with some officials advocating for possible rate cuts if economic growth slows sharply, while others prioritize controlling inflation. Powell emphasized that the central bank is prepared to provide dollar liquidity through swap lines if needed, but for now, markets are functioning as expected under challenging conditions. Overall, the Fed is holding steady until there is greater clarity on the economic impact of recent policy changes.