Is Jerome Powell Preparing to Intervene? Experts Weigh In on the Fed’s Next Move Amid Tariff Uncertainty

As of mid-April 2025, Federal Reserve Chair Jerome Powell has maintained a cautious stance toward economic intervention, despite growing pressure from markets, politicians, and the broader public. Since his April 4 speech, Powell has not issued further public statements, yet analysts and economists are increasingly speculating on whether the Fed will be forced to act—especially in light of President Donald Trump’s aggressive tariff policies.

A Cautious Chair Facing Mounting Pressures

Powell’s last major address on April 4 warned that the Trump administration’s sweeping tariffs—ranging from 25% on Korean imports to broader levies on Chinese, Mexican, and Canadian goods—could spark inflation while simultaneously slowing economic growth. The Fed Chair made clear that monetary policy adjustments would not be rushed in response to short-term fluctuations.

He acknowledged that while the inflationary impact of tariffs might be transitory, there's a chance it could become more entrenched. That possibility, he noted, warrants “careful monitoring and patience,” as the Fed seeks to anchor long-term inflation expectations.

What Experts Are Saying Now

Though Powell has remained silent since April 4, many economists believe the Fed may soon be compelled to act—either to contain inflation or to counter slowing growth.

1. Interest Rate Policy in Focus

• Current Status: The Fed held interest rates steady at 4.25–4.50% in both January and March FOMC meetings, defying Trump’s public calls for aggressive rate cuts.

• Expert View: Analysts at Goldman Sachs and JPMorgan believe the Fed may start signaling potential rate cuts by June, with market odds currently pricing in a 70% chance of a cut. However, Powell’s emphasis on a “data-driven approach” suggests he’s unlikely to move unless inflation or unemployment metrics demand it.

2. Inflation Concerns Growing

Tariffs have begun filtering into consumer prices. Forecasts now suggest headline inflation could rise over 3%, breaching the Fed’s 2% target. A recent JPMorgan report noted that prolonged tariffs could increase inflation by at least 1 percentage point and reduce 2025 GDP by 0.3%.

3. The Political Dimension

Trump’s repeated calls for rate cuts have put Powell in the political spotlight. Yet Powell has reinforced the Fed’s independence, stating that he is under no legal obligation to resign before his 2026 term ends. This posture suggests a resistance to political interference—even in a high-stakes election year.

Potential Scenarios Ahead

Scenario A: Holding Rates Steady

• Pros: Helps control inflation and stabilizes the U.S. dollar, which could offset rising import prices caused by tariffs.

• Cons: Could stifle economic activity, weaken corporate earnings, and slow job creation.

Scenario B: Cutting Rates

• Pros: Would stimulate growth and potentially ease the economic burden of tariffs on businesses and consumers.

• Cons: Risks fueling inflation and could damage the Fed’s credibility if inflation expectations become unanchored.

Scenario C: Raising Rates (Less Likely)

• Pros: Strong anti-inflationary signal, strengthens dollar further.

• Cons: Increases recession risk, depresses markets, and might provoke political backlash.

Financial Market Reactions

Since Powell's April 4 remarks, markets have been volatile. The S&P 500 saw a sharp 6% drop in response to heightened tariff tensions and policy uncertainty. Gold prices soared past $3,000/oz, reflecting investor flight to safety. Bitcoin and other crypto-assets also exhibited increased volatility, as investors search for inflation hedges.

Conclusion: Data, Not Deadlines

Despite speculation, Powell appears committed to letting data—not deadlines or political pressure—guide the Fed’s decisions. With the next key speech scheduled for April 16, markets are watching closely for clues on whether the central bank is preparing for intervention.

Until then, investors and policymakers alike will need to navigate an environment shaped as much by politics as by economics. The Powell Fed remains cautious, independent, and—at least for now—firmly in wait-and-see mode.