Fed: Rate cuts can wait

Policymakers split on urgency for cuts

- COLBY SMITH

Jerome H. Powell, chair of the Federal Reserve, said central bank officials could afford to be patient before cutting interest rates as they wait to see how President Trump's policies, including tariffs, affect inflation and the labour market.

In remarks prepared for delivery to the Senate on Tuesday morning, Mr Powell said that the Fed was in no rush to lower borrowing costs given the labour market remains solid and inflation remains "somewhat elevated."

"Policy changes continue to evolve, and their effects on the economy remain uncertain," Mr Powell said in his prepared remarks. "The effects of tariffs will depend, among other things, on their ultimate level. Expectations of that level, and thus of the related economic effects, reached a peak in April and have since declined.

"Even so," he said, "increases in tariffs this year are likely to push up prices and weigh on economic activity."

He added that "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."

In April, Trump announced sweeping tariffs on nearly all trading partners but suspended those almost immediately to quell a global market meltdown. Although the United States is working to reach trade agreements that could forestall some of the tariffs indefinitely, the president has not wavered in his plan to impose the levies on July 9 if such deals are not reached. Many economists expect companies to pass the added costs on to their customers.