Speaking to the House Financial Services Committee, Powell said interest rates will stay put until Fed officials better understand the impact of tariffs on the economy.

“Uncertainty about the economic outlook has diminished but remains elevated.”

“Immigration was an important driver of the labor market rebalancing [after the Covid-19 pandemic]. Reduced immigration could therefore fuel renewed inflationary pressures.”

“Given ... the likely boost to near-term inflation from tariffs, the bar for cutting rates, even in the face of a weakening economy and potentially increased unemployment, is higher.”

“While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent.”

Fed officials must decide this year whether to lower interest rates further to support the economy, or keep them elevated for longer to contain inflation. First they need to determine what proportion of inflation is tariff-related and whether that increase is temporary.

But according to Fed Chair Jerome Powell: “Overworked maybe, not overstaffed. Everybody at the Fed works really hard.”

However, officials reduced their expected number of rate cuts for next year from four to two.