Traders and economists see increased chances of cuts ahead but Federal Reserve Chair Jerome Powell said central bankers will wait to see the effects of new tariffs.

Tariffs set to take effect this week risk stoking even higher inflation and slower growth than expected, complicating the central bank’s decisions on monetary policy.

Traders pulled back their expectations for Federal Reserve interest-rate cuts this year and two-year US Treasuries plunged after President Donald Trump paused his tariff plans for most countries.

Traders on Friday continued to pull back from bets on aggressive Federal Reserve interest-rate cuts this year, as the closely-followed University of Michigan surveys of consumer sentiment showed confidence and inflation expectations deteriorating further in late March and early April.

A number of import taxes are still in place, and with many back-and-forth tariff actions and threats, it can be tough to keep track of where things stand.

Treasury Secretary Scott Bessent told reporters that the pause was not a result of the brutal selloffs in the financial markets but rather because other countries are seeking negotiations. About an hour later,