Powell Testifies: Fed Holds Steady Amid Trade Policy Uncertainty

U.S. Federal Reserve Chair Jerome Powell emphasized the need for patience in determining the impact of rising tariffs on inflation before considering any interest rate cuts, countering President Trump's calls for immediate action. Powell's testimony before the House Financial Services Committee highlighted how recent tariff increases could lead to higher prices and impact economic activity.

In his prepared remarks, Powell indicated that while inflation may be temporarily affected, the central bank is in a strong position to assess the economy's future direction before modifying policy. Investors responded by adjusting their expectations for rate changes, increasing the likelihood of potential reductions later this year.

Despite pressure from some Fed officials and President Trump for rate cuts, Fed policy remains steady. Economic projections suggest two possible quarter-point rate cuts by the year's end, influenced by ongoing developments in trade policy. Powell's leadership continues to garner bipartisan support in Congress, despite Trump's criticism.

(With inputs from agencies.)