Some GOP senators criticized Powell, however, for characterizing tariffs as a potential driver of inflation. Sen. Pete Ricketts, a Republican from Nebraska, argued that the duties could simply act as a one-time increase in prices that wouldn’t fuel inflation.

Powell said when it comes to taking the interest on reserve power away, "there's an illusion that it would save money. That is not the case."

The Federal Reserve will continue to wait and see how the economy evolves before deciding whether to reduce its key interest rate, Chair Jerome Powell said Tuesday, a stance directly at odds with President Donald Trump’s calls for immediate cuts.