Lisbon: US Federal Reserve Chair Jerome Powell stated on Tuesday that the central bank would have reduced the policy rate if not for the high tariffs imposed by US President Donald Trump. Powell's comments were made during a European Central Bank forum in Portugal, where he was asked whether the Federal Reserve would have implemented more rate cuts in the absence of tariffs. He affirmed, "I think that's right."

According to Anadolu Agency, Powell elaborated that the Federal Reserve halted its rate cuts upon assessing the magnitude of the tariffs, which resulted in a significant rise in inflation forecasts for the United States. He described the US economy as being in a stable position and noted that inflation trends align with expectations when the effects of tariffs are disregarded.

Powell acknowledged that the full impact of tariffs has yet to manifest, but he anticipates heightened inflation data during the summer months. He emphasized the Federal Reserve's approach of reviewing data in each meeting, stating, "We are going meeting by meeting. I wouldn't take any meeting off the table or put it directly on the table. It's going to depend on how the data evolves."

His remarks followed the Federal Reserve's recent decision to maintain interest rates within the 4.25% to 4.5% range. The central bank had previously kept the rate at a historically high level of 5.5% from July 2023 to September 2024, before reducing it to 4.5% in December. Despite the decision to hold rates steady, uncertainty regarding the economic outlook remains a concern for the Federal Reserve.

President Trump has been vocal in his criticism of the Federal Reserve's interest rate policies, demanding cuts and citing actions by European central banks. Last week, Trump referred to Powell as "terrible" and "an average mentally person," urging him to resign. Trump has also previously labeled Powell as "a fool," "a major loser," and a "numbskull."

In response to these criticisms, Powell stated, "All I want, and all anybody at the Fed wants, is to deliver an economy that has price stability, maximum employment, (and) financial stability." He expressed his commitment to ensuring an economically stable environment for his successor, adding, "What keeps me awake at night is: How do we get that done? I want to hand over to my successor an economy in good shape."