Federal Reserve chair Jay Powell pushed back on expectations of more interest rate cuts in the coming months, saying policymakers faced a “challenging situation” in deciding whether to prioritise fighting inflation or protecting jobs.

The Fed last week cut borrowing costs by a quarter-point to a range of 4 per cent to 4.25 per cent amid signs of weakness in the labour market and data showing the impact of tariffs on price pressures remained modest.

Many investors are banking on another two quarter-point cuts before the end of 2025. But Powell on Tuesday signalled those moves were far from a done deal, saying if central bankers “ease too aggressively”, then they “could leave the inflation job unfinished and need to reverse course” to restore price increases to their 2 per cent goal.