The Trump administration's tariff plans may well just cause a one-time jump in prices, but the risk it could cause more persistent inflation is large enough for the central bank to be careful in considering further rate cuts,

Some GOP senators criticized Powell, however, for characterizing tariffs as a potential driver of inflation. Sen. Pete Ricketts, a Republican from Nebraska, argued that the duties could simply act as a one-time increase in prices that wouldn’t fuel inflation.

Federal Reserve Chair Jerome Powell said the central bank is taking a more cautious approach to the effects of President Trump’s tariff increases than it did in 2019 because recent increases in tariff rates are much larger and because the economy is coming off a period of much higher inflation.