By Isabella Torregiani
3:47pm PDT, Jul 2, 2025
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On Tuesday, July 1, Federal Reserve Chair
Jerome Powell suggested that President
Donald Trump's tariffs are responsible for stalling potential interest rate cuts. Speaking at a conference, Powell said the ongoing threat of a global trade war caused the Federal Reserve to delay plans to lower interest rates — a decision that impacts how much Americans pay on mortgages, credit cards and other loans.
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During a panel in Portugal, Jerome Powell doubled down on his view, directly pointing to President Donald Trump's trade policies as the cause of the delay. "We went on hold when we saw the size of the tariffs. All inflation forecasts for the United States went up materially as a consequence," he said.
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Ahead of the conference, President Donald Trump sent Jerome Powell a message, criticizing the Federal Reserve for not cutting rates, saying the board "should be ashamed" and citing other countries that had already slashed borrowing costs. Seemingly in response, Powell said the central bank was taking a cautious approach, waiting to see how tariffs would affect inflation before making any decisions. "As long as the U.S. economy is in solid shape, we think that the prudent thing to do is to wait and learn more and see what those effects might be," he explained.
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Looking ahead, Jerome Powell also spoke about his goals for the remainder of his term, which ends in 10 months. "I want to hand over to my successor an economy in good shape," he said. "It's going to depend on the data, and we are going meeting by meeting. I wouldn't take any meeting off the table or put it directly on the table. It's going to depend on how the data evolve." The Federal Reserve's next meeting is scheduled for July 29 through July 30.