Jerome Powell Tells Lawmakers The Fed Will Remain Cautious About Rate Cuts

The only person asking for more patience than Fed Chair Jerome Powell is someone running back to grab an onion “real quick” while their groceries hurtle down the conveyor belt at checkout. Powell testified before the House Financial Services Committee yesterday, with his semiannual address mirroring his usual script: Wait and see.

While Powell declined to give a definitive answer on whether the Federal Reserve would cut interest rates in July, he said that inflation data this month and next will be vital in determining when any rate cuts would occur this year. Powell expects the Fed to get a better picture of the effect of tariffs on inflation over the next few months.

The Federal Open Market Committee voted unanimously last week to keep interest rates steady at 4.25%–4.5%, where they’ve hovered for the last six months. But the “dot plot,” which anonymously shows individual Fed officials’ rate cut expectations, highlighted a growing disagreement among central bankers:

• Out of the total 19 members, nine said there should be either one or zero cuts this year, while eight hope for two cuts, and two members expect three cuts.
• In the past week, two Trump-appointed members, Michelle Bowman and Christopher Waller, have been vocal about favoring a July rate cut.

It’s getting harder to block out the politics: While the Federal Reserve is considered an independent institution, President Trump and a growing chorus of Republican lawmakers have put pressure on Powell to cut rates. Trump has directly attacked Powell, even threatening to fire him multiple times.

The most likely scenarios: Economists and future market pricing think a rate cut is unlikely in July but that one could be in the cards for September.—MM