
Jerome H. Powell, the chair of the Federal Reserve, defended on Tuesday the central bank’s wait-and-see approach to cutting interest rates, in the face of intense pressure from President Trump to follow central banks around the world that have acted faster.
Decisions will depend on incoming data, Mr. Powell said at the European Central Bank’s annual conference in Sintra, Portugal. He did not give hints on the timing of rate cuts, other than to say most members of the Fed’s rate-setting committee expected them to come sometime this year.
“We are going meeting by meeting,” Mr. Powell said. “I wouldn’t take any meeting off the table or put it directly on the table. It’s going to depend how the data evolve.”
This year, central banks across the world have diverged on the speed and magnitude of their interest rate cuts as inflation has slowed globally. But top policymakers who gathered on Tuesday for a panel discussion in Portugal agreed that extreme uncertainty about the economic outlook, stemming partly from Mr. Trump’s policies, had made signaling policy decisions more difficult.
“We are facing geopolitical developments that are worrying generally, but that also are causing two sides of risk to inflation,” Christine Lagarde, the president of the European Central Bank, said in the panel discussion. “So we have to continue to be extremely vigilant.”
Policymakers have said the world has become more unpredictable, making forecasting inflation and setting interest rates more challenging. One major source of uncertainty is how high Mr. Trump will set tariffs for many countries, and how that could rewrite global supply chains.
The governors of the central banks in Japan and South Korea also said on the panel that they were closely watching the effect of Mr. Trump’s policies.
Hanging over the panel discussion was Mr. Trump’s pressure campaign on the Fed to lower rates. The president has repeatedly pointed to rate cuts by the European Central Bank and others, and he has encouraged the Fed to follow suit.

On Monday, Mr. Trump sent a handwritten note to Mr. Powell and other board members, admonishing them for not lowering borrowing costs. It was the latest in a string of attacks in which Mr. Trump has disparaged the Fed chair and has toyed with pushing him out before his term ends in May.
When asked on Tuesday about the attacks, Mr. Powell said, “I’m very focused on just doing my job.” After which the room, filled with other central bank governors and economists, burst into applause.
The president has claimed that the Fed’s decision to hold rates steady this year, after lowering borrowing costs by a percentage point last year, has cost the country trillions of the dollars. At one point, Mr. Trump demanded a 2.5-percentage-point rate cut.
But Mr. Powell has stuck to a patient stance even as divisions have started to emerge among American officials over the timing and size of potential cuts.
Most members of the Fed’s rate-setting committee believe it would be appropriate to cut rates later this year, but some have forecast no cuts this year. Two Trump-appointed officials have made the case for a cut as early as the Fed’s next meeting at the end of the month.
Traders wager interest rate cuts will start in September.
The rationale for waiting rests on the assumption that as long as the economy is in solid shape, the Fed can afford to be patient.
In sharp contrast, the European Central Bank has lowered interest rates eight times in the past year as inflation has slowed. Some of those rate cuts have come since Mr. Trump has tried to reshape global trade by significantly raising tariffs. In Europe, those trade policies are leading to weaker growth, and economists are expecting them to put further pressure on prices. They are also bracing for slower growth in the United States, and expect Mr. Trump’s levies to raise consumer prices for Americans.
What is not yet clear is whether a short-term jump in inflation will escalate into a persistent problem. Mr. Powell said on Tuesday that in his final 10 months as chair, he would focus on how to “hand over to my successor an economy in good shape.”
Ms. Lagarde of the European Central Bank said interest rates in the region were now in a “good position” to withstand the global uncertainty. Inflation in the euro area averaged 2 percent in June, data published on Tuesday showed, matching the central bank’s target.
“I’m not saying mission accomplished, but I say target reached,” Ms. Lagarde said.
The Bank of England has taken a cautious approach, cutting rates four times in the past year, to 4.25 percent, as inflation concerns remain.
Inflation is expected to pick up again this year in Britain. But Andrew Bailey, the bank’s governor, said jumps in prices would be temporary and were driven by increases in so-called regulated prices, including electricity and water bills. Instead, there are signs of softness in the economy, which should lead to slower price growth.
“I think the direction of interest rates continues to be downwards,” he said.