Powell's Inflation Fight Will Trump's Tariffs Throw a Wrench In It?

Powell Emphasizes Fed's Obligation to Prevent 'Ongoing Inflation Problem' Despite Trump Criticism

Federal Reserve Chair Jerome Powell has reaffirmed the central bank's unwavering commitment to controlling inflation, signaling a cautious approach to future policy adjustments amid economic uncertainties and ongoing criticism from former President Donald Trump.

In prepared remarks for his semi-annual testimony before Congress this week, Powell outlined the Fed's current stance, emphasizing the need to carefully assess the impact of tariffs on prices before considering any changes to interest rates. His testimony comes at a crucial time, as the US economy navigates a complex landscape of strong growth, a robust labor market, and persistent inflationary pressures.

Key Takeaways from Powell's Remarks:

• Commitment to Price Stability: Powell underscored the Fed's dedication to achieving its 2% inflation target, highlighting the importance of maintaining price stability for sustainable economic growth.
• Economic Growth and Labor Market: He acknowledged the strong performance of the US economy, with growth remaining solid and the labor market operating near full employment.
• Tariff Uncertainty: Powell specifically addressed the uncertainties surrounding the impact of tariffs, noting that their ultimate effect on the economy will depend on their level and scope. "Policy changes continue to evolve, and their effects on the economy remain uncertain," Powell stated. "The effects of tariffs will depend, among other things, on their ultimate level."
• Cautious Approach to Policy Adjustments: The Fed is adopting a wait-and-see approach, preferring to gather more data and assess the evolving economic landscape before making any adjustments to its monetary policy stance. As Powell put it, policymakers are "well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance."

Trump's Criticism Continues

Powell's cautious stance comes against a backdrop of continued criticism from former President Donald Trump, who has repeatedly voiced his displeasure with the Fed's policies. In a recent post on his Truth Social platform, Trump expressed his frustration, hoping "Congress really works this very dumb, hardheaded person, over."

Congressional Testimony Schedule

Powell is scheduled to deliver his testimony and the Fed's monetary policy report to the following congressional committees:

• House Financial Services Committee: Tuesday morning
• Senate Banking Committee: Wednesday

The Road Ahead

The coming weeks will be critical as the Fed monitors economic data and assesses the impact of various factors, including tariffs, on inflation and economic growth. Powell's emphasis on patience and data-dependence suggests that the central bank is prepared to remain flexible and adapt its policies as needed to achieve its dual mandate of price stability and full employment.

Ultimately, the Fed's commitment to its mandate, even in the face of external pressure, underscores its independence and its dedication to the long-term health and stability of the US economy. This steadfastness is crucial for maintaining confidence in the central bank's ability to navigate economic challenges and support sustainable growth.

Tags: Federal Reserve,Jerome Powell,Inflation,US Economy,Tariffs,Interest Rates,Economic Growth,Labor Market,Monetary Policy,Fed Chair

Source: https://www.cnbc.com/2025/06/24/powell-emphasizes-feds-obligation-to-prevent-ongoing-inflation-problem-despite-trump-criticism.html