Republicans on Capitol Hill are echoing President Trump, demanding answers from the chairman of the Federal Reserve, Jerome Powell, about why he has refused to cut interest rates this year. Mr. Powell says the potential inflation shocks from the president’s tariffs are weighing heavily on the Fed at this moment. 

In his opening statement before the House Financial Services Committee on Tuesday, Mr. Powell said that while there is uncertainty due to tariffs and some stubborn — though lower — inflation, he believes that the economy is in a fundamentally strong position. 

“Despite elevated uncertainty, the economy is in a solid position. The unemployment rate remains low, and the labor market is at or near maximum employment,” he told lawmakers Tuesday. “Inflation has come down a great deal but has been running somewhat above our 2 percent longer-run objective. We are attentive to the risks to both sides of our dual mandate.”

He told the Financial Services Committee that one of the things most prominent on the Fed’s radar is “a decline in sentiment over recent months and elevated uncertainty about the economic outlook, largely reflecting trade policy concerns.”

The president has said he cares little for Mr. Powell’s more careful approach. 

Mr. Trump early Tuesday morning issued a scathing Truth Social post about Mr. Powell, using his new nickname for the Fed chairman: “Too Late.”

“Europe has had 10 cuts, we have had ZERO. No inflation, great economy — We should be at least two to three points lower. Would save the USA 800 Billion Dollars Per Year, plus. What a difference this would make,” the president wrote just after 1 a.m. on Tuesday. 

“I hope Congress really works this very dumb, hardheaded person, over,” Mr. Trump said. “We will be paying for his incompetence for many years to come. THE BOARD SHOULD ACTIVATE.”

A Republican member of the panel, Congressman Bill Huizenga, who is mulling a run for Senate in Michigan, echoed Mr. Trump’s comments about the worldwide trends in rate cuts. 

“There’s no recession. That’s been established. There’s no hyperinflation or certainly not as [high] as what some had been projecting, yet there seems to be higher than expected … interest rates,” Mr. Huizenga said. “So, what is it that’s keeping, in your mind, the Fed from … [lowering] interest rates?”

“Why aren’t we doing what the rest of the world is doing?” he added. 

Mr. Powell responded by saying only that “the forecast” shows a “meaningful increase in inflation” over the course of 2024. 

Another Republican member of the committee, Congressman Scott Fitzgerald, pressed Mr. Powell about why the Fed cut interest rates by 50 basis points just weeks before the 2024 election. Many Republicans had said at the time that it appeared Mr. Powell was putting his thumb on the scale for Vice President Harris, painting a rosier economic picture for the incumbent party despite real concerns about inflation. 

“It kinda raised some serious questions as to whether or not the data, like, truly supported such a move at that time, and I think some of us were surprised that it was a full half-percent,” Mr. Fitzgerald told the chairman. “Can you revisit that again — what the Fed was thinking at that time, because it seems to be somewhat of an enigma now. It stands out as, why was this done?”

Mr. Powell said that the Fed was responding to an increase in unemployment and a decrease in inflation over the course of 2024. He also said he was being criticized at the time for not cutting rates, and that the Fed was following several other central banks that had started reducing their rates before the Fed. 

“We don’t take into consideration political factors,” the chairman said. “If we start doing that, I don’t know where that stops. Once you start considering elections and stuff like that, where does it stop?” 

Mr. Fitzgerald said that it was not his intention to suggest such a thing. He said he was only confused as to why “the same move” wasn’t being made now. 

“The difference, of course, is at this time, all forecasters are expecting — pretty soon — that some significant inflation will show up from tariffs,” Mr. Powell said. “We can’t just ignore that.”

Congressman Mike Lawler asked Mr. Powell similar questions, demanding answers about why the chairman has not cut rates despite strong economic trends. Mr. Powell insisted that the Fed does not “need to be in any rush.”

“We haven’t fully restored price stability and another shock — we have to be careful if there’s a meaningfully large and sustained inflation shock. We have to be careful about that,” Mr. Powell responded.