WASHINGTON (Reuters) -U.S. Federal Reserve Chair Jerome Powell said on Tuesday the central bank needs more time to see if rising tariffs drive inflation higher before considering the interest rate cuts that President Donald Trump is demanding.

"Increases in tariffs this year are likely to push up prices and weigh on economic activity," Powell said in testimony prepared for delivery this morning at a hearing before the House Financial Services Committee.

"The effects on inflation could be short-lived, reflecting a one-time shift in the price level. It is also possible that the inflationary effects could instead be more persistent...For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance."

Powell's testimony largely reiterates the central bank's most recent policy statement approved last week when Fed officials voted unanimously to hold the benchmark interest rate steady in the current 4.25% to 4.5% range, and gave no indication rate cuts were imminent.

New economic projections released at the time showed officials at the median expect two quarter-point rate cuts by the end of the year, with investors anticipating the first to come at the Fed's September meeting.

In recent days two Fed governors, both Trump appointees, have said rates could fall as soon as the July meeting given inflation has not yet risen in response to tariffs, while two reserve bank presidents say they still worry inflation will intensify over the rest of the year.

Trump, who appointed Powell as chair in his first term but is expected to replace him when his term ends next spring, has repeatedly called for steep rate cuts.

"We should be at least two to three points lower," he said in a social media post ahead of the hearing, adding in reference to Powell that he hoped "Congress really works this very dumb, hardheaded person, over."

Powell has built strong alliances in Congress over his three terms as Fed chair, often getting plaudits from Republicans and Democrats for his oversight of the Fed.

In his prepared testimony Powell said the economy remains in a "solid position," with low unemployment and inflation far below its pandemic-era peak. 

But much about Trump's ultimate trade policies remain in flux, with a July 9 deadline approaching for higher tariffs on a large set of countries.

The outcome of that policy shift will be critical for the Fed to understand, Powell said. 

"Policy changes continue to evolve, and their effects on the economy remain uncertain," Powell said.