Federal Reserve considers interest rate cuts amid economic challenges from tariffs

Federal Reserve Chairman Jerome Powell signaled that the central bank might lower interest rates soon, which could reduce monthly credit card payments and facilitate borrowing for cars and homes, but he warned of economic challenges ahead.”In the near term, risks to inflation are tilted to the upside and risks to employment, to the downside. A challenging situation,” Powell said.Powell’s comments reflect concerns about a weakening labor market, evidenced by three consecutive poor jobs reports. The Federal Reserve may need to lower interest rates to address these issues, but doing so could exacerbate inflation by making borrowing easier. Powell also noted that tariffs are already contributing to rising prices, and he fears this trend may continue.“The effects of tariffs on consumer prices are now clearly visible. We expect those effects to accumulate over coming months, with high uncertainty about timing and amounts,” Powell said.Adding to the complexity, President Donald Trump has been pressuring Powell and the Federal Reserve to aggressively cut interest rates. Trump has criticized Powell and is now threatening to fire Federal Reserve Governor Lisa Cook, accusing her of mortgage fraud.”What she did was bad, so I’ll fire her if she doesn’t resign,” Trump said.Cook, one of seven members of the Federal Reserve, allegedly applied for two mortgages within a 14-day period, listing both as her primary residence. The accusation, made by the president’s Federal Housing Finance Agency director, lacks supporting evidence. Neither Cook nor the Federal Reserve has responded to the allegations.The Federal Reserve is scheduled to meet again in September to determine its next steps.Click below to see more Washington Bureau coverage: