Powell Signals Possible Rate Cuts Amid Tariff Concerns
Jerome Powell, the Federal Reserve Chair, delivered his semi-annual policy report to Congress yesterday—with another session scheduled for today. His remarks covered everything from inflation risks tied to tariffs to the Fed’s cautious stance on interest rates.
Powell acknowledged that new tariffs could push inflation higher in the coming months, particularly over the summer. But he didn’t sound overly alarmed. The effects, he suggested, might be temporary—or they might linger. It’s hard to say yet. Either way, the Fed seems ready to adjust if needed.
“Our job is to keep long-term inflation expectations anchored at 2%,” Powell said. “A one-time price jump isn’t necessarily a crisis, but we don’t want it spiraling into something worse.”
Rate Cuts Still on the Table—But Timing Is Uncertain
Powell made it clear that the economy has room for rate cuts later this year, assuming inflation doesn’t surge unexpectedly. Right now, he thinks rates are high enough to justify easing, but the Fed isn’t rushing.
“We’ll see how tariffs play out in the June and July data,” he said. “If inflation stays softer than expected, we could move earlier. But if prices climb or the job market stays hot, we’ll probably wait.”
Most Fed officials, he noted, still lean toward cutting rates toward year-end. That’s not a guarantee, though. Powell’s tone suggested they’re watching, not deciding.
Cryptocurrencies? “Not Our Problem”
Powell also fielded questions about Bitcoin and other cryptocurrencies—though he seemed eager to keep the Fed at arm’s length.
“We don’t have the authority to buy crypto, and we’re not asking for it,” he said flatly. Banks, however, can still offer crypto-related services as long as they manage risks properly.
He didn’t sound worried about crypto disrupting the dollar’s dominance, either. “The dollar will remain the world’s reserve currency for the foreseeable future,” Powell said. That part, at least, wasn’t up for debate.
*This isn’t investment advice, of course. Just Powell’s take on where things stand—for now.
