Federal Reserve Chair Jerome Powell said he expects the impact of tariffs to show up in inflation data in coming months, while acknowledging that uncertainties remain.

“We’re watching. We expect to see over the summer some higher readings,” Powell said Tuesday on a panel alongside other prominent central bank leaders moderated by Bloomberg’s Francine Lacqua.

Still, he added, policymakers are prepared to learn the impact could be “higher or lower, or later or sooner than we expected.”

The US central bank is wrestling with an awkward tension between its forecasts and recent data.

The Fed has held off on lowering interest rates this year — despite intense pressure from President Donald Trump — in part to determine whether tariff-driven price hikes might evolve into more persistent inflation. But so far, the price hikes aren’t showing up.

“We’ve always said that the timing, amount and persistence of the inflation would be highly uncertain,” Powell said at the European Central Bank’s annual Forum on Central Banking in Sintra, Portugal.

Follow the Sintra panel in real time on Bloomberg’s TOPLive blog

The Federal Open Market Committee voted unanimously in June to once again hold rates steady. However, updated quarterly projections showed a divide among officials over the likely forward path of rates.

While 10 policymakers foresee at least two cuts this year, seven projected no cuts in 2025. Another two officials penciled in just one reduction before year’s end.

Trump’s imposition of new levies on dozens of US trading partners, along with his frequent fluctuations on the specifics of the duties and halting progress on striking trade deals, has injected uncertainty into the economic outlook. Forecasters widely expect the tariffs to put upward pressure on inflation and dent economic growth.

Still, economic data have shown little impact from the tariffs, either in prices or the labor market. Trump and several top administration officials have seized on that as they demand lower rates.

Two Trump-appointed Fed governors, Christopher Waller and Michelle Bowman, have argued a rate cut could be appropriate as soon as the Fed’s meeting later this month. Both have cited benign economic data as among the factors influencing their view.

Powell told lawmakers during a congressional hearing last week that the economic data would suggest the central bank would be cutting rates if not for forecasts that project tariffs will boost inflation.