“Everyone that I know is forecasting a meaningful increase in inflation in coming months from tariffs,” he said.
The U.S. Federal Reserve held interest rates steady on Wednesday, keeping its benchmark rate within the 4.25%-4.50% range.
WATCH: The Federal Reserve again ignored Trump’s call for immediate rate cuts. Chair Jerome Powell said it would hold rates steady as tariff uncertainty lingers https://t.co/2rxEliHD14 pic.twitter.com/92maAxVsgr
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Policymakers signaled they still anticipate two rate cuts by the end of 2025. However, Fed Chair Jerome Powell warned that expectations should remain cautious amid signs of coming inflation driven by proposed import tariffs.
“No one holds these … rate paths with a great deal of conviction, and everyone would agree that they’re all going to be data-dependent,” Powell stated during a press conference following the Fed’s two-day policy meeting.
Powell noted that inflation readings have been favorable recently, but added that planned tariffs from the Trump administration could reverse that trend. “Everyone that I know is forecasting a meaningful increase in inflation in coming months from tariffs,” he said. “Ultimately, the cost of the tariff has to be paid, and some of it will fall on the end consumer.”
Powell emphasized the importance of waiting for clarity on the economic effects of tariffs before making policy changes. “We’ll make smarter and better decisions if we just wait a couple of months,” he said.
The Fed’s outlook also included slower growth and rising unemployment through 2025.