Fed Chairman Jerome Powell told Congress on Tuesday the central bank is rebuffing President Trump’s strident calls to cut interest rates because it has a responsibility to keep inflation in check in the face of tariff-related price increases.

Mr. Powell told the House Financial Services Committee that every forecaster expects some inflation due to U.S.-imposed tariffs.

“We can’t just ignore that. We’re just saying, ‘Let’s wait and see more,’ that’s all we’re doing,” Mr. Powell said. “It’s just a question of being prudent and careful.”

Mr. Powell said inflation had cooled significantly from mid-2022 but remains above the Fed’s target of 2%, and it’s unclear how shifting tariffs will affect the economy as the White House seeks trade deals.

“Policy changes continue to evolve, and their effects on the economy remain uncertain,” Mr. Powell said in prepared testimony. “The effects of tariffs will depend, among other things, on their ultimate level.”

Mr. Powell also said the Fed would be watching the degree to which companies pass the cost of tariffs to consumers, driving up prices.

“We’re perfectly open to the idea that the pass-through will be less than we think and, if so, that will matter for our policy,” he said.

The Fed this month kept the benchmark interest rate at 4.25% to 4.5%, infuriating Mr. Trump, who says rates should be 2 or 3 points lower.

“I hope Congress really works this very dumb, hardheaded person, over. We will be paying for his incompetence for many years to come,” Mr. Trump wrote on Truth Social before Mr. Powell’s testimony.

The House hearing turned into a mild and sober affair, despite Mr. Trump’s post. 

GOP lawmakers did press Mr. Powell on why the Fed seemed eager to cut rates, once inflation cooled, during the Biden era but refused under Mr. Trump.

Mr. Powell repeated his concerns about the uncertain size and persistence of tariff-driven inflation, should it occur. He said the Fed is open to future cuts but, since the labor market and overall economy have been strong, the central bank is not in a hurry.

The Fed chair is scheduled to testify before the Senate Banking Committee on Wednesday.

Mr. Trump says that since inflation has been mild, U.S. borrowers deserve more favorable terms. He said Europe has cut interest rates multiple times while the Fed stands pat.

Some Fed governors have said cuts in July could be warranted, creating internal pressure on Mr. Powell.

Mr. Trump, in his social media post, seemed to nod to that pressure by saying the Fed board should “activate.”

He also said the central bank could correct course if the economic picture worsened.

“No inflation, great economy — We should be at least two to three points lower,” Mr. Trump wrote. “Would save the USA 800 Billion Dollars Per Year, plus. What a difference this would make. If things later change to the negative, increase the Rate.”

Mr. Powell has declined to comment directly on Mr. Trump’s attacks, saying he’s concentrating on the Fed’s core goals.

“We’re focused on one thing, and that is we want to deliver a good economy for the benefit of the American people. That’s it,” Mr. Powell told House lawmakers. “Anything else is kind of a distraction.”

The Fed is an independent agency that’s supposed to be free from direct political pressure, though that firewall appears to be eroding. 

The president appoints a Fed chairman every four years but doesn’t have the authority to fire him or her.

Bill Pulte, director of the Federal Housing Finance Agency, said on X that there is “momentum building” for Mr. Powell’s resignation, given the views of some Fed governors. 

“It is clear that Powell’s political bias against our great President needs to be looked at,” he wrote. 

Democrats say Mr. Trump has only himself to blame for the Fed’s hesitancy.

“I know I’m contacted all the time by businesses in my district, manufacturing businesses, that can’t even start thinking about investing with the level of chaos just from the tariff policy alone,” Rep. Bill Foster, Illinois Democrat, said.

Mr. Trump announced hefty tariffs on dozens of trading partners in early April, though paused them for 90 days to allow space for negotiation.

He imposed tariffs on steel, aluminum, cars and auto parts that are brought into the U.S. from foreign nations, and Chinese imports face tariffs of at least 30%.

The unfolding impact of the levies, plus the fluctuating percentage of some of the duties, is giving the Fed pause.

“Many paths are possible here,” Mr. Powell said Tuesday. “We could see inflation come in not as strong as we expect and, if that were the case, that would tend to suggest cutting sooner.”

• Tom Howell Jr. can be reached at thowell@washingtontimes.com.