Fed Chair Powell (Q&A) says for a long time, Fed has hypothesised that tariffs would be a one-off
- Fed is already looking through the tariff shock
- Will be cautious on energy prices; energy has not peaked yet
- Fed wants to see progress on energy and tariffs before lowering rates
Context
Fed Chair Powell's comments signal that the Federal Reserve is taking a measured approach to recent tariff impacts, viewing them as likely temporary while remaining cautious on energy prices, which still have upward momentum. This suggests that any decision to lower rates will hinge on future developments in these areas, keeping monetary policy tightening bias in place for now and influencing market expectations around rates and the USD.
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