Federal Reserve Chair Jerome Powell told lawmakers on Tuesday that recent economic data would have likely justified continuing to lower interest rates if not for concerns that higher tariffs might derail the central bank’s yearslong fight to defeat inflation.

New York Fed President John Williams said the central bank’s interest-rate stance is “entirely appropriate” as uncertainty about tariffs and inflation lingers, leaning against recent calls from some other Fed officials for consideration of a rate cut in July.

In Asia, the Bank of Japan's board member Naoki Tamura said the central bank should consider additional interest-rate hikes without delay, as it could hit its inflation target sooner than expected.

And Thailand’s central bank held interest rates steady amid renewed political tensions at home and growing uncertainty abroad.

Federal Reserve Chair Jerome Powell said little to tee up a rate cut next month without explicitly ruling one out. But his answers to lawmaker queries suggested it was more likely officials would wait until at least their September meeting to see if tariff-driven price increases are milder than expected before resuming rate cuts.

“If it turns out that inflation pressures do remain contained, we will get to a place where we cut rates sooner rather than later, but I wouldn’t want to point to a particular meeting,” Powell said at a House Financial Services Committee hearing.

Manufacturing activity in the mid-Atlantic region contracted this month, albeit at a softer pace, as declines in shipments and demand slowed despite accelerating prices. The Fifth District Survey of Manufacturing Activity's index for June rose to minus 7 from minus 9 in May, the Federal Reserve Bank of Richmond said Tuesday. A consensus of economists polled by The Wall Street Journal expected minus 10. Despite the uptick, the reading below zero means more of the 63-70 firms responding to the survey this month reported decreasing activity than increasing. It also remains below the levels of the early part of 2025. (Dow Jones Newswires)

Not everybody on Wall Street is panicked about the U.S. fiscal outlook. Just a month ago, a sharp selloff in Treasurys spurred widespread alarm that the bond market might finally be buckling under the pressure of outsize U.S. borrowing. But bonds have rallied since, boosted in part by mild inflation data that have driven up bets that the Federal Reserve will cut interest rates by the fall. Now, with Republicans trying to push their giant package of tax cuts and spending measures over the finish line, here is a look at how the nuances of the U.S. fiscal situation are driving swings in bond yields.

7 a.m.: MBA Weekly Mortgage Applications Survey
10 a.m.: New Residential Sales
10 a.m.: Federal Reserve Board Chair Jerome Powell presents Monetary Policy Report to U.S. Senate Banking Committee
2 p.m.: Federal Reserve Board of Governors open meeting

8:30 a.m.: Chicago Fed National Activity Index
8:30 a.m.: Advance Report on Durable Goods
8:30 a.m.: Advance Economic Indicators Report
8:30 a.m.: Revised Corporate Profits
8:30 a.m.: 3rd estimate GDP
8:30 a.m.: Unemployment Insurance Weekly Claims Report, Initial Claims
8:45 a.m.: Federal Reserve Bank of Richmond President Thomas Barkin speaks at New York Association for Business Economics event
10 a.m.: Pending Home Sales Index
11 a.m.: Federal Reserve Bank of Kansas City Survey of Tenth District Manufacturing
2 p.m.: U.S. Securities and Exchange Commission Closed Meeting
4:30 p.m.: Foreign Central Bank Holdings
4:30 p.m.: Federal Discount Window Borrowings
7 p.m.: Federal Reserve Bank of Minneapolis President Neel Kashkari participates in Montana Chamber of Commerce event

Fed Chair Jerome Powell says in congressional testimony that he has tuned out insults hurled his way by President Trump. The Fed is narrowly focused on its economic mission, he says: "We stay focused on that task all the time." "I don't know how else to do the job," Powell adds. — Matt Grossman

• President Trump seems intent on including tariffs in any trade deal, and Canadian negotiators in continuing talks are seeking ways to satisfy him while protecting their access to their biggest market, said Kirsten Hillman, Canada’s ambassador to the U.S.
• Inflation in Canada steadied in May as drivers paid less at the pump and hefty rent increases continued to cool, though the central bank may still lack a clear enough signal to cut interest rates again. 
• The conflict in the Middle East increases the risk that businesses and households in the U.K. will expect the rate of inflation to remain high, and raise their prices and wage demands, a policymaker at the Bank of England said Tuesday. 
• The loosening of the U.K.’s job market is likely to continue and help cool inflation, Bank of England Deputy Gov. Dave Ramsden said. He was one of three members of the Monetary Policy Committee to vote for what would have been a fifth cut in the key interest rate last week.
• Inflation pressures across the Australian economy continued to abate in May, setting the stage for a third cut in interest rates by the Reserve Bank of Australia next month.
• The war between Israel and Iran has revived Chinese leaders’ interest in a pipeline that would carry Russian natural gas to China, according to people close to Beijing’s decision-making, potentially jump-starting a project that has been stalled for years.

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ’s global team of reporters and editors. This newsletter was compiled by news associate Roshan Fernandez in New York. Send your tips, suggestions and feedback to roshan.fernandez@wsj.com.