Federal Reserve Chairman Jerome Powell affirms that inflation in the United States is expected to rise by the end of the summer. This forecast was made after the Fed chief refused to cut interest rates.

For this reason, tensions have escalated between US President Donald Trump and Jerome Powell. The latter suggested that the tariffs imposed by the White House would likely lead to a surge in inflation in the near future. Powell voiced this forecast while commenting on the decision not to lower the funds rate. “Ultimately, tariffs have to be paid for, and part of those costs will fall on the end consumer,” Powell noted. Hence, the Fed chief predicts that consumer inflation could flare up again this summer.

Meanwhile, the rate-setting committee refrained from a rate cut, citing a slight increase in inflation. The latest policy meeting was held on June 17-18, during which it was decided to keep the benchmark interest rate at 4.25%–4.5% per annum. This means the Federal Reserve has once again ignored Donald Trump’s calls to lower interest rates — a demand he makes regularly. After Powell’s refusal to cut rates, the president called him “a dummy.”

The Federal Reserve lowered interest rates several times in 2024. However, the regulator put the official funds rate on hold after Trump came to power. Importantly, the Fed’s policy statement in January, like the current one, reported stable labor market conditions in the US and a similar situation with consumer inflation. Since April, the central bank defines the trade war initiated by Donald Trump as a key catalyst for inflation. Interestingly, experts acknowledge that such a situation has now become the norm in the United States.