Fed Chair Powell Blames Trump Tariffs for Steady Interest Rates

Strategic Insights -

Federal Reserve Chair Jerome Powell suggested on Tuesday that President Donald Trump's trade policies, particularly tariffs on foreign goods, have contributed to the central bank's recent decision to keep interest rates steady. Powell made the comments during an appearance at the European Central Bank forum in Sintra, Portugal, where he faced questions about the impact of Trump's tariffs on inflation forecasts.

Powell's remarks come as the president has increasingly attacked his leadership, calling him a "moron" and hinting at firing him. However, Powell maintained a measured tone, stating that he and the Fed "didn't overreact" to the tariffs and that they are simply taking their time. Despite the president's criticism, the majority of economic handicappers agree that the tariffs have driven up inflation predictions.

Key Takeaways:

  • The Federal Reserve has kept interest rates steady since December, citing the impact of Trump's tariffs on inflation forecasts.
  • Powell stated that the Fed "went on hold" when they saw the size of the tariffs, which caused all inflation forecasts for the United States to go up "materially".
  • The president has repeatedly criticized Powell's leadership, calling him a "moron" and hinting at firing him.
  • Experts predict inflation rates to surge due to Trump's tariffs, with Goldman Sachs predicting a 3.7 percent increase by 2026.
  • Former Fed Chair Janet Yellen also predicted inflation rates of at least 3 percent, while the Bureau of Labor Statistics reported a 2.4 percent increase in prices in May.

Statistics:

  • Federal Reserve interest rates have remained steady since December.
  • Inflation forecasts went up "materially" due to Trump's tariffs.
  • Goldman Sachs predicts a 3.7 percent increase in inflation by 2026.
  • Former Fed Chair Janet Yellen predicts inflation rates of at least 3 percent.
  • Household prices rose 2.4 percent in May.
  • Tariffs may drive up inflation rates by at least 3 percent.

Sources:

  • Bloomberg Television: [https://www.youtube.com/watch?v=dR9kxB-B_rQ](https://www.youtube.com/watch?v=dR9kxB-B_rQ)
  • European Central Bank forum in Sintra, Portugal
  • Schwab: "FOMC Meeting" [https://www.schwab.com/learn/story/fomc-meeting](https://www.schwab.com/learn/story/fomc-meeting)
  • NBC News: "Trump's tariffs kept Fed from cutting rates, Jerome Powell says" [https://www.nbcnews.com/business/economy/trumps-tariffs-kept-fed-cutting-rates-jerome-powell-says-rcna216220](https://www.nbcnews.com/business/economy/trumps-tariffs-kept-fed-cutting-rates-jerome-powell-says-rcna216220)
  • Fortune: "Trump: Powell is like a powerful golfer who can't score" [https://fortune.com/2019/06/18/trump-powell-the-fed/](https://fortune.com/2019/06/18/trump-powell-the-fed/)
  • CNBC: "Trump's war against the Powell Fed has taken another political turn" [https://www.cnbc.com/2025/06/26/trumps-war-against-the-powell-fed-has-taken-another-political-turn.html](https://www.cnbc.com/2025/06/26/trumps-war-against-the-powell-fed-has-taken-another-political-turn.html)
  • TheDailyBeast: "Trump Sends 'Mean Girls'-Style Sharpie Note to Jerome Powell" [https://www.thedailybeast.com/trump-sends-mean-girls-style-sharpie-note-to-jerome-powell/](https://www.thedailybeast.com/trump-sends-mean-girls-style-sharpie-note-to-jerome-powell/)
  • CNN: "Goldman Sachs predicts consumer prices will surge 3.7 percent by 2026" [https://www.cnn.com/2025/06/20/business/tariff-price-increases-inflation-explained](https://www.cnn.com/2025/06/20/business/tariff-price-increases-inflation-explained)
  • CNBC: "Yellen predicts inflation rates will be at least 3 percent" [https://www.cnbc.com/2025/06/12/yellen-trump-tariffs-inflation.html](https://www.cnbc.com/2025/06/12/yellen-trump-tariffs-inflation.html)
  • Bureau of Labor Statistics: "US consumer price index may have risen in May, but not as much as expected" [https://www.cnn.com/2025/06/11/economy/us-consumer-price-index-may](https://www.cnn.com/2025/06/11/economy/us-consumer-price-index-may)
  • TheDailyBeast: "Fed Chair Powell Blames Trump Tariffs for Steady Interest Rates, We Didn't Overreact" [https://www.thedailybeast.com/fed-chair-powell-blames-trump-tariffs-for-steady-interest-rates-we-didnt-overreact/](https://www.thedailybeast.com/fed-chair-powell-blames-trump-tariffs-for-steady-interest-rates-we-didnt-overreact/)