Rate Cuts? Not So Fast. Powell Says Tariffs May Keep Prices Rising

Anyone hoping to refinance their mortgage or land a cheaper car loan this summer may be disappointed.

During recent testimony before Congress, Federal Reserve Chair Jerome Powell downplayed the likelihood of rate cuts, citing tariff-driven inflation concerns, according to Reuters.

While some Fed officials had floated a July cut, Powell told lawmakers there’s no urgency to ease borrowing costs.

Reuters reported that he pointed to a strong labor market and unresolved trade policies as reasons to hold steady.

If you’re eyeing a new loan or refinance, don’t bank on lower rates soon. Instead, improve your credit and reduce debt to act quickly if rates eventually fall.

Tariff impact expected to show up in your bills

Powell said upcoming inflation data for June and July will be key in assessing the impact of tariffs. Though prices haven’t surged yet, he told Congress that could change, based on projections reported by Reuters.

Inflation outcomes will shape the Fed’s next move. If prices accelerate, lower rates could be off the table even longer, Reuters noted.

Given the uncertainty, now’s a good time to lock in fixed rates on adjustable debt, like variable mortgages or credit lines. Stable payments can help shield your budget if costs rise.

Your finances face continued pressure

If you’re carrying credit card debt, don’t expect lower rates soon. As Reuters explained, the Fed recently voted to keep its benchmark rate in the 4.25% to 4.5% range, and Powell signaled no near-term cuts.

He told lawmakers that forecasters expect inflation to pick up this year, reinforcing the Fed’s wait-and-see stance.

With no relief in sight, now’s the time to trim spending and automate savings. Small moves today can ease the impact of high borrowing costs.

Powell also reminded Congress that the Fed isn’t weighing in on trade policy, it’s responding to its economic effects. Reuters noted that when trade decisions affect prices, they fall within the Fed’s responsibility.

Political heat meets monetary cool

The hearing came as political pressure mounts. Former President Trump has pushed for steep rate cuts, even calling Powell names on social media, Reuters reported.

Despite that, Powell emphasized the Fed’s independence. Reuters reports that he said decisions must be guided by economic data, not politics, especially when tariffs affect inflation.

Markets adjusted quickly. Reuters reported that investors pulled back bets on a July cut and shifted focus to September. The Fed’s latest projections still show two cuts by year-end.

Your playbook while rates stay high

Savers can benefit from the current rate environment. High-yield savings accounts and CDs continue to offer solid returns. Avoid leaving cash in low-yield accounts; move it where it works harder.

Homeowners considering refinancing may want to wait. A minor rate drop might not justify the cost, but a larger one later could.

The Fed is staying cautious. Powell’s remarks suggest rates won’t fall until inflation slows. That means borrowers should plan for continued financial pressure — and act now to stay ahead.