Fed Chair Powell Resists Trumps Pressure for Rate Cuts, Adopts Wait-and-See Approach to Economy

Federal Reserve Chair Jerome Powell testified in front of the House Financial Services Committee on Tuesday and resisted pressure from President Donald Trump for a significant reduction in the main interest rate. Powell stated that the central bank is in no hurry to trim the rate and is well positioned to wait and learn more about the likely course of the economy before considering any adjustments to its policy stance.

Powell cited the inflationary impact from tariffs while noting steady economic growth and a healthy job market. He said policymakers will carefully assess fresh inflation data and did not rule out a rate cut at the Fed's next scheduled meeting on July 29-30. "If it turns out that inflation pressures do remain contained, then we will get to a place where we cut rates sooner rather than later," he said.

The Fed held the benchmark interest rate steady for the fourth consecutive policy meeting on June 18 and released a median forecast indicating that central bankers expect to make two quarter-point reductions by the end of 2025. However, Fed officials widely differ on the likely path for borrowing costs this year, with ten projecting at least two rate cuts, two anticipating one reduction, and seven penciling in no change.

Since the meeting, two policymakers have said they may favor a quarter-point reduction at the July meeting, warning of potential weakness in the labor market while noting that inflation has cooled. Fed Vice Chair for Supervision Michelle Bowman said Monday that she would support lowering the policy rate as soon as the next meeting if inflation pressures remain contained.

The president has been calling on Powell to trim rates for weeks, recently turning up the heat with Vice President JD Vance, Commerce Secretary Howard Lutnick, and Kevin Hassett, director of the National Economic Council. "No inflation, great economy — we should be at least two to three points lower," Trump said in a social media post on Tuesday. "Would save the USA 800 Billion Dollars Per Year, plus."

Anxiety over tariffs and inflation eroded consumer confidence in the economy this month, according to a survey released by the Conference Board on Tuesday. The outlook among consumers unexpectedly dimmed across all age and income groups, and regardless of political affiliation. "Tariffs remained on top of consumers' minds and were frequently associated with concerns about their negative impacts on the economy," said Stephanie Guichard, senior economist for global indicators at the Conference Board.

Powell's testimony comes as Trump continues to criticize the Federal Reserve and its handling of monetary policy. "I hope Congress really works this very dumb, hardheaded person over," Trump said of Powell. "We will be paying for his incompetence for many years to come."