Jerome Powell, the Chair of the Federal Reserve, indicated that the central bank would have implemented a more lenient monetary policy if not for President Donald Trump‘s tariff strategy.

What Happened: Powell made the revelation during a panel discussion on Tuesday. He suggested that the Fed would have likely reduced rates this year if Trump had not announced his plans to impose higher tariffs on imported goods, reported CNBC. 

“In effect, we went on hold when we saw the size of the tariffs and essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs,” Powell said at the European Central Bank (ECB) forum in Sintra, Portugal.

This acknowledgment comes at a time when the Fed has maintained its interest rates, despite increasing pressure from the White House. When asked if the markets could expect a rate cut in July, Powell responded,  “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 evolve.”

SEE ALSO: Bitcoin, Ethereum, XRP, Dogecoin Dip But ‘Early July Dip Buys Will Age Well,’ Trader Says – Benzinga

Why It Matters: This revelation comes in the wake of President Trump’s escalating criticism of Powell. Just a day before Powell’s statement, Trump had accused Powell of keeping interest rates "artificially high" and insisted the benchmark should drop to “1% or 2%", half of what it is now.

Earlier in June, Senator Elizabeth Warren (D-Mass.) echoed Powell’s views and criticized Trump’s tariff policies, claiming they hinder the Federal Reserve's ability to provide the lower interest rates that Americans need.

The President has also been very keen to replace Powell. Meanwhile, U.S. Treasury Secretary Scott Bessent, when asked about the likelihood of him heading the Central Bank after Powell's term ends in May 2026, stated, "I will do what the President wants.” This statement has fueled speculations about the future of Powell’s position and the direction of the Fed’s monetary policy.

READ MORE: Fed Rate Cuts May Not Be A Win For Stocks, Warns JPMorgan — Expects Dollar And Bond Yields To Fall

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.