• Jerome Powell emphasizes political neutrality of the Federal Reserve amid Trump’s pressure.
• The chair links the Fed’s reluctance to cut rates to tariffs imposed by Trump.
• Powell indicates a wait-and-see approach pending data on inflation and tariffs.

US Federal Reserve Chair Jerome Powell recently reiterated the central bank's commitment to political neutrality, stressing that "we're trying to deliver macro stability, financial stability, economic stability for the benefit of all the people" amid increasing pressure from President Trump for aggressive interest rate cuts. Speaking at a conference in Sintra, Portugal, Powell noted the significant influence of Trump's tariffs on the Fed's policy decisions, stating, "In effect, we went on hold when we saw the size of the tariffs" which have led to rising inflation forecasts. He maintained that while the economy appears solid, the tariffs' implications need thorough evaluation before any action can be taken, according to Indiatimes and CBS News.

During the same forum, Powell confirmed that the Fed has held off on cutting interest rates partly due to the tariffs, stating, "I think that’s right," when asked if rate cuts would have occurred sooner without them. His strong focus on inflation control and market stability underlines that the Fed won't react hastily while uncertainty remains about the economic situation influenced by these tariffs. Powell's comments align with concerns raised by officials and analysts regarding the predictability and future path of inflation, as reported by Business Insider and Channel News Asia.

Powell also asserted that without the influence of tariffs, the Fed would likely have proceeded with rate cuts already. He explained that the Fed's indecision is not only a result of these tariffs but also reflects broader uncertainties in the economic landscape, reflecting the committee's cautious stance as they assess how the economic indicators evolve. He emphasized, "It’s going to depend on how the data evolves," indicating an ongoing commitment to data-driven decision-making, according to AA and CBS News.

Trump has actively criticized the Fed's approach, alleging it hampers economic growth, while Powell maintains that the institution must operate independently from political pressures to achieve long-term stability. The ongoing friction between monetary policy and political pressures marks a significant aspect of the Fed's current challenges, particularly as Powell indicated that some within the Fed anticipate rate cuts may be necessary later this year, depending on economic indicators, as noted by both Indiatimes and Business Insider.