By CHRISTOPHER RUGABER, AP Economics Writer

WASHINGTON (AP) — Federal Reserve Chair Jerome Powell on Tuesday stuck to his position that the central bank will keep its key rate on hold while it waits to see how President Donald Trump’s tariffs effect the economy, despite the steady stream of criticism from the White House, which wants lower borrowing costs.

Powell, speaking in Sintra, Portugal, at a conference hosted by the European Central Bank, also said that U.S. inflation is likely to pick up later this summer, though he acknowledged that the timing and magnitude of any price increase from the duties is uncertain. But he said the Fed will keep rates on hold while it evaluates the impact of tariffs on the U.S. economy.

“As long as the economy is in solid shape, we think the prudent thing to do is to wait and see what those effects might be,” Powell said, referring to the sweeping duties Trump has imposed this year.

Powell’s comments underscored the divide between the U.S. central bank’s leader and the Trump administration. Trump has repeatedly urged the Fed to cut its key rate, which he says would save U.S. taxpayers on interest costs on the federal government’s massive debt, and boost the economy. The fight has threatened the Fed’s traditional independence from politics, though since the Supreme Court signaled the president can’t fire the chair, financial markets haven’t responded to Trump’s criticism.

The Fed chair also said that without tariffs, the Fed would probably be cutting its key rate right now. The central bank went “on hold” after it saw how large Trump’s proposed tariffs were, Powell said, and economists began forecasting higher inflation.

At the same time, Powell did not rule out a rate cut at the Fed’s next policy meeting July 29-30.

“I wouldn’t take any meeting off the table or put it directly on the table,” Powell said. Most economists, however, expect the Fed won’t reduce rates until September at the earliest.

On Monday, the president attacked Powell again and extended his criticisms to the entire Fed governing board, which participates on interest-rate decisions.

“The board just sits there and watches, so they are equally to blame,” Trump said. The attack on the board ratchets up pressure on individual Fed officials, such as Governor Chris Waller, who have been mentioned as potential successors to Powell, whose term ends in May 2026.

The Fed has kept its key short-term interest rate unchanged this year, at about 4.3%, after cutting it three times in 2024.

At a news conference in June, Powell suggested that the central bank would “learn a great deal more over the summer” about whether President Donald Trump’s sweeping tariffs would push up inflation or not. The comment suggested the Fed wouldn’t consider cutting rates until its September meeting.

Yet a few days later, Fed governors Waller and Michelle Bowman, who were both appointed by Trump, said that it was unlikely the tariffs would lead to persistent inflation. Both also indicated that they would likely support reducing the Fed’s rate at its July 29-30 meeting.