The Fed's Powell will pause interest rate cuts as Trump's tariffs become a source of inflationary pressure, according to the Central Bank's megaphone.

"Nick Timiraos, the Wall Street journalist known as the 'Fed's megaphone,' hinted in an article in the Wall Street Journal yesterday that the Fed may not cut interest rates this month due to the potential inflationary prospects caused by President Trump's proposed tariff policy. (Background: President Trump demands immediate rate cuts from the Fed: 'I understand interest rates better than Powell!'; US bond yield slides) The Federal Reserve (Fed) will announce its first interest rate decision for 2025 on January 30th. Although President Trump stated at the World Economic Forum in Davos on January 24th that he will continue to demand rate cuts from the Fed, the market still overwhelmingly believes that the Fed will maintain interest rates this month. The probability of interest rates remaining unchanged this month is as high as 99.5%. Source: CME Group's FedWatch Tool. The 'Fed's megaphone:' Tariffs are a key factor influencing the Fed's interest rate decision. In this context, Nick Timiraos, the Wall Street journalist known as the 'Fed's megaphone,' also hinted in an article in the Wall Street Journal yesterday that the Fed may not cut interest rates this month. Timiraos stated that whether the Fed continues to cut interest rates and when it does so largely depends on the inflationary prospects in the United States, which in turn depend on President Trump's tariff policy: Tariffs remain a key variable in the Fed's interest rate decisions because people are concerned about how tariffs will affect expectations for future inflation among businesses and consumers. This time may be different. Timiraos further pointed out that during Trump's previous term, he implemented his beloved tariff war, but the Fed still took measures to cut interest rates. However, this time, Timiraos believes that the Fed, including Chairman Powell, may react differently because the United States has just experienced a period of serious inflation. Timiraos quoted Steven Kamin from the American Enterprise Institute, who stated: Price setters and price payers are now better able to adapt to price pressures than they were in 2018. The Fed will indeed be more inclined to oppose raising tariffs in this cycle than it was in the previous one. The Fed will also not easily change interest rates before the tariff policy is formally implemented, so it may not make any abnormal reactions at the moment. Timiraos further pointed out that even when Trump imposed tariffs during his previous term, people's expectations for future inflation remained low. However, with the high inflation caused by the COVID-19 pandemic, people are now more aware of inflation and will raise doubts: Will the Fed allow prices to rise? Expectations for future inflation may continue to drive price increases. Related reports: USD index rises above 110, US bond yield continues to climb: Barclays Bank: The Fed may only cut interest rates once this year in June; Trump's tariff war threatens inflation! Fed board member: The rate cut at the end of last year should be the 'last one in the near term'; Limited expectations for Fed rate cuts, stock market pullback, upcoming Trump inauguration... How do analysts view the future of BTC? (The Fed's megaphone: Trump's tariffs have become a source of inflationary pressure, and Fed Chairman Powell may pause rate cuts) This article was originally published on BlockTempo."