Sintra Forum

Fed, Powell: without tariffs we would have already cut rates. "Criticism Trump? Focused on jobs"

To a question about the current US monetary policy stance, Powell replied that it is slightly restrictive but not such as to curb an economy that remains generally healthy

1 July 2025

CHRISTINE LAGARDE PRESIDENTE DELLA BANCA CENTRALE EUROPEA, JEROME POWELL PRESIDENTE FEDERAL RESERVE FORUM BCE DI SINTRA

2' min read

Key points

Powell: on rates we wait, cuts stopped because of tariffs
Powell, Trump criticism? I'm focused on my job
"No comment on fiscal policy but US debt is not sustainable"
Lagarde, no commitment on the future of rates
Lagarde, concerned about use of Ai and its use to distort reality

2' min read

"A solid majority of the Federal Open Market Committee agrees that interest rates should be cut in the second half of the year. It will, of course, depend on the data and we will look in particular at what will emerge with respect to inflation trends and watch for any signs of weakness from the labour market."

This was said by the President of the FedJerome Powell speaking at the Governors' Roundtable on Monetary Policy at the Synthra Forum.

According to Powell, 'inflation in the United States fell to 2.3%, but when we saw the size of the tariffs, we opted for a wait-and-see position given that all inflation expectations went up. It is not an overreaction: the prudent thing to do is to wait and understand more and see what the effects will be" of tariffs on inflation.

To a question on the current US monetary policy stance, Powell replied that it is slightly restrictive but not such as to curb an economy that remains generally healthy.

Powell: on rates we wait, cuts stopped because of tariffs

Powell confirmed that the Federal Reserve has discontinued its interest rate cuts in the wake of the Trump administration's trade tariffs in order to see what the inflationary effects of these are.

"We paused when we saw this whole thing about tariffs and expectations of higher inflation as a result of them. The US economy is in a solid situation and the prudent thing to do is to wait and see what these measures will do. For now we wait," he said.

Powell, Trump criticism? I'm focused on my job

"I'm focused on doing my job and using the tools that have been made available to us by Congress to achieve our goal of price stability," Powell said in response to a question about the continued criticism he is receiving from President Donald Trump for his cautiousness in cutting interest rates. ECB President Christine Lagarde also spoke on the issue: 'I think I speak for all central bankers and we would all do the same thing'.

"No comment on fiscal policy but US debt is unsustainable"

"We do not comment on fiscal policy," Powell said, "but I repeat what I said a year ago here in Sintra, that our debt is not sustainable and we have to deal with this problem sooner or later.

Lagarde, no commitment on future rates

The ECB "will continue to decide meeting after meeting, based on the data, and we are not committed to any predefined path" on rates. This was said by President Christine Lagarde. Lagarde would not comment on the strength of the euro today at $1.18: 'We take that into account, but it also reflects the strength of our economy and there is a depreciation of the dollar. We also look at capital flows'.

Lagarde, concerned about Ai use and its use to distort reality

"I am concerned about the role that artificial intelligence will increasingly play and the use that can be made of it to distort reality," Lagarde said speaking at the Governors' Roundtable on Monetary Policy at the Sintra Forum. "This is an element of concern and we can all fall prey to it."