The Federal Reserve recently decided to pause interest rate cuts again. After the meeting, Fed Chairman Jerome Powell reiterated that the Fed is not in a hurry to act and does not believe it should preemptively cut rates in response to tariff shocks, once again contradicting U.S. President Donald Trump, who has repeatedly urged for immediate rate cuts.On May 7th, Eastern Time, the Federal Reserve released a monetary policy statement that added a new line: &#34;The risks of rising unemployment and rising inflation have increased.&#34; At the subsequent press conference, Powell was asked which issue needs to be addressed first during his tenure, unemployment or inflation.Powell stated that the risks of rising unemployment and rising inflation are intensifying. It is currently unclear which risk is more concerning. &#34;It is too early to draw conclusions now.&#34; Powell believes that both unemployment and inflation risks need to be monitored simultaneously, and trade-offs may have to be made between them.When asked whether the Fed would take a long time to understand the developments, Powell emphasized, &#34;I think we don't know.&#34; He reiterated his previous statements that the Fed will not rush to cut rates. He said:<blockquote>&#34;We believe there is no need to rush to adjust rates.&#34;&#34;We believe we can be patient, and we will focus on the data.&#34;</blockquote>At the same time, Powell emphasized that Trump's high tariffs could potentially drive up unemployment and inflation. He said:<blockquote>&#34;If the announced significant tariff increases persist, it could lead to rising inflation, slowing economic growth, and increasing unemployment.&#34;</blockquote><h2>Current Monetary Policy is Moderately Restrictive; Waiting is a Clear Decision</h2>Powell commented on the U.S. economy, stating that it remains robust. The labor market is generally balanced, at or near full employment. Inflation growth has significantly slowed. Wage growth continues to trend moderately.Powell stated that the current monetary policy of the Federal Reserve is moderately or slightly restrictive. He said, &#34;The underlying inflation outlook is good.&#34;Commentary suggests that this means Powell acknowledges that the current monetary policy is still suppressing inflationary pressures, and interest rates are not at a neutral level.Powell reiterated that the Fed's policy is in a good state and that there is no pressure to take action on rate cuts, saying, &#34;We can act quickly when the time is right.&#34;Powell stated that the Fed does not know where trade policy will head. But for now, &#34;for us, waiting and observing is a fairly clear decision.&#34; He indicated that businesses, market participants, and forecasters are all watching developments, insisting that &#34;everyone is waiting.&#34;Commentary suggests that, based on the information currently disclosed by the Fed, the threshold for a rate cut in June is quite high.<h2>If High Tariffs are Maintained, the Fed's Goals Will Not Progress for at Least the Next Year</h2>A reporter asked about the path to a soft landing, and Powell reiterated that the Fed is still unclear about the direction of tariffs and other trade policies.Powell believes that if Trump maintains high tariffs, the Fed will not be able to make progress on its dual mandate of achieving inflation and employment targets. He said, &#34;For at least the next year,&#34; the Fed's goals may not make further progress.<blockquote>&#34;Given the scope and scale of the tariffs, we are likely to find that the risks of rising inflation and unemployment will certainly increase. If that is the case, if tariffs are ultimately implemented at levels we cannot yet determine, we will not be able to make further progress on achieving our goals.&#34;&#34;We may see this process delayed.&#34;</blockquote>He pointed out that the Federal Reserve will not issue forecasts regarding the likelihood of an economic recession.Powell stated that businesses are delaying investment decisions and households are postponing consumption spending decisions. In such a situation, the Federal Reserve cannot take &#34;preemptive&#34; action. He said that last fall's rate cuts by the Federal Reserve were not preemptive, and if there is any difference to mention, it is that they came a bit late.<blockquote>&#34;This is not a situation that can be preemptive, because we actually do not know how to respond to this data, until we see more data.&#34;</blockquote>Powell indicated that in some cases, rate cuts this year are appropriate, while in others they are not. &#34;I cannot confidently say I know what the appropriate path is unless we further understand how this issue will be resolved and its economic impact on employment and inflation.&#34;The statement from this Federal Reserve meeting noted that uncertainty regarding the economic outlook has &#34;further&#34; increased. Powell also mentioned uncertainty at the press conference, saying:<blockquote>&#34;My intuition tells me that the uncertainty regarding the economic trajectory is extremely high.&#34;</blockquote>Powell stated, &#34;Typically, the situation will gradually become clearer, and the correct direction will also become evident.&#34; Meanwhile, he believes that &#34;our (U.S.) economic performance is good.&#34;<h2>Tariff Impact Has Not Yet Arrived; Policy Impact on Inflation May Be Temporary or More Lasting</h2>Powell still believes that the impact of the Trump administration's policies on inflation may be temporary.<blockquote>&#34;The impact on inflation may be temporary, reflecting a one-time change in price levels.&#34; But &#34;the inflation impact may also be more lasting.&#34;</blockquote>When asked whether the impact of tariffs has not yet arrived, he replied, &#34;Not yet.&#34; &#34;People are worried about inflation, worried about tariff impacts, but that impact has not yet arrived.&#34;Powell stated that the Federal Reserve is committed to anchoring inflation expectations. The Fed may find that achieving both price stability and full employment can be in conflict. Currently, the Federal Reserve is prepared and waiting for certainty in policy.Powell said, &#34;Right now we see inflation fluctuating at quite low levels.&#34;Powell indicated that there is no need to take action now, nor is there data to support action, and he has stated more than once: &#34;We just need to wait and see how things develop.&#34;Commentators say this means that the Federal Reserve is in a passive rather than active mode. From the market's perspective, there is still some distance from triggering the Fed Put, the so-called Federal Reserve put option that anticipates the Fed will intervene once there is a significant drop.<h2>Negotiations May Substantially Change Trade Situation or May Not</h2>Regarding the upcoming high-level economic and trade talks between China and the U.S., Powell said he could not comment directly.Powell mentioned the so-called reciprocal tariffs announced by the Trump administration on April 2, reiterating that the level of new tariffs far exceeds the Federal Reserve's expectations.However, he then said that the U.S. &#34;seems to be entering a new (trade) phase,&#34; as the Trump administration is initiating preliminary trade negotiations with some important U.S. trading partners. This may &#34;substantially change the situation, or may not.&#34; &#34;We cautiously avoid making conclusive judgments when facts change.&#34;Powell stated regarding trade policy: &#34;Ultimately, this is up to the government to decide. It is their responsibility, not ours.&#34;<h2>US GDP May Be Revised Upward, Import Surge Makes Data Difficult to Interpret</h2>In line with statements from officials of the Trump administration, Powell expects that US GDP data may be revised upward.Powell noted that numerous survey results indicate that tariffs have raised inflation expectations. He believes that trade issues complicate the measurement of GDP. The surge in imports in the first quarter will make it difficult to accurately interpret GDP data.Powell said that GDP data conveys one signal, while the &#34;Private Domestic Final Purchases&#34; (PDFP) data, which excludes inventories and government spending, may convey another signal. This may be harder for the general public to understand. Overall, this situation does not fundamentally change the Federal Reserve's policy path.Powell believes that the potential disconnect between consumer sentiment surveys and actual consumer spending is &#34;another reason for the Fed to remain cautious.&#34;When asked about the tools the Federal Reserve has to respond to supply chain disruptions, Powell replied: &#34;We simply do not have those tools.&#34; He added that it depends on the government and the private sector.<h2>Not Influenced by Trump's Calls, No Request to Meet with the President</h2>Powell stated that Trump's calls for interest rate cuts &#34;will not affect our work at all.&#34; He said: &#34;We will always do the same thing, which is to use our tools to promote maximum employment and price stability for the benefit of the American people. We will only consider economic data, outlook, and risk balance, and nothing more. That is all we need to consider.&#34;A reporter asked Powell how he responded to Trump's previous statement that he would not remove him from the position of Federal Reserve Chair. Powell replied that he had nothing to say about it.Another reporter asked if Powell might continue to serve as a Federal Reserve Governor after his term as Chair ends in May 2026. Powell also stated that he had no comment on that.When asked why he had not met with Trump during his new presidential term, Powell replied: &#34;I have never requested to meet with any president, nor will I ever.&#34;<h2>Unsustainable Path of Government Debt Growth</h2>A reporter asked if spending cuts by the Trump administration could impact economic growth. Powell stated that the Federal Reserve takes Congress's budget actions for &#34;granted.&#34; Congress does not need the Federal Reserve to provide fiscal policy advice, just as the Fed does not need Congress to provide monetary policy advice.However, Powell reiterated his warning that the fiscal path is unsustainable. He said:<blockquote>&#34;One thing we know for sure is that the current trajectory of government debt growth is not sustainable. The debt itself is not at an unsustainable level, but the growth path is unsustainable.&#34;</blockquote>

Powell stated that high tariffs could lead to rising inflation and unemployment rates, and it is too early to determine which risk is more severe; the current monetary policy is moderately restrictive, and the potential inflation outlook is good, with a clear decision to wait and see; it is impossible to act preemptively because it is unknown how to respond until more data is seen; the tariff shock has not yet arrived, and the policy's impact on inflation could be either temporary or more lasting; at least for the next year, the Fed's inflation and employment targets will not make progress; negotiations may substantially change the trade situation, or they may not; U.S. GDP may be revised upward, making it difficult to accurately interpret GDP due to import surges; it will not be influenced by Trump's calls, and there has been no request for a meeting with the president; the growth path of government debt is unsustainable

- The Federal Reserve recently decided to pause interest rate cuts, with Chairman Powell emphasizing a cautious approach amid rising unemployment and inflation risks.  
- Powell stated that the impact of high tariffs could lead to increased inflation and unemployment, complicating the Fed's dual mandate of price stability and full employment.  
- He acknowledged the uncertainty surrounding economic conditions and reiterated that the Fed would not rush to adjust rates, preferring to wait for more data before making decisions.

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Slapping Trump in the face! Powell reiterates that there is no rush to cut interest rates, stating that the economy is still good, uncertainty is extremely high, and refuses to act preemptively due to tariffs