Fed Keeps Rates Steady as Powell Dismisses Preemptive Cuts Amid Tariff Uncertainty

The Federal Reserve kept interest rates steady at 4.25%–4.5% this week, but the real headline was Fed Chair Jerome Powell shutting the door on a preemptive rate cut. With inflation still running hot and new economic risks rising from President Trump’s tariffs, Powell made it clear: the Fed isn’t budging until it sees more data. “We actually don’t know what the right responses to the data will be,” Powell said, dousing hopes of a quick policy pivot.

Trump’s surprise tariff rollout in April caught even the Fed off guard. Powell admitted the tariffs were “substantially larger than anticipated,” and warned they could push inflation up and economic growth down—potentially delaying the Fed’s ability to hit its dual mandate of stable prices and full employment. For now, Powell says the Fed is “in a good position to wait and see,” but also noted the risks to both inflation and unemployment have grown.

Despite political pressure from Trump to slash rates, Powell stayed firm. He emphasized the Fed isn’t swayed by political noise and will only act based on the data. “I’ve never asked for a meeting with any president, and I never will,” he said. That’s Powell-speak for: don’t expect the Fed to backstop fiscal policy decisions with easy money. Instead, the central bank is signaling it may keep rates higher for longer, especially if the tariff-fueled inflation sticks around.

So what does this all mean for your wallet? Credit card APRs remain north of 20%, auto loans hover above 7%, and mortgages, while slightly down, are still high compared to pre-hike levels. On the flip side, savings accounts and CDs continue offering better-than-inflation yields—so savers are finally seeing some love. But with supply chains tightening and retailers warning of lean inventory, especially ahead of the holiday season, the pressure on consumers may only build from here.