US News

📌 Powell to Push Back on Calls for Fed Rate Cuts as Soon as July

Federal Reserve Chair Jerome “Jay” Powell signaled today that he intends to resist growing pressure to initiate interest rate cuts at the Fed’s next policy meeting in July, setting the stage for a deeper division within the Fed and renewed friction with President Trump.

🛑 Powell Floors Calls for Early Cuts

In testimony before the House Financial Services Committee this morning, Powell stressed the robustness of the U.S. economy and warned that the full impact of President Trump’s tariff measures remains unclear. He emphasized:

Inflation risks from the tariffs could be temporary, but equally persistent—requiring more evidence before easing policy.
The labor market remains strong with low unemployment, and economic fundamentals are “solid,” illustrating justification for maintaining current rates.

Currently, the Fed’s benchmark interest rate stands in a 4.25 – 4.50 % range, a level Powell deems still restrictive and appropriate given persistent uncertainty .

🤝 Divergent Voices on the FOMC

While Powell urges caution, the Federal Open Market Committee is increasingly split over timing:

Chris Waller and Michelle Bowman, both Trump appointees, now advocate for a rate cut as soon as July, citing contained inflation and potential risks to employment.
Meanwhile, a majority—seven officials—see no rate cuts this year, ten possibly two cuts, and others support just one—highlighting a widening policy rift.

🏛️ Trump vs. Powell: Political Pressure Building

President Trump has ramped up demands for aggressive cuts, calling for a 2–3% reduction in borrowing costs and publicly labeling Powell “very dumb” and “hardheaded”. Powell, however, leans on Fed independence and congressional support to defend a data-driven path, resisting political intervention.

⚠️ The Tariff Wildcard

Powell highlighted the upcoming July 9 tariff deadline as a potential turning point. Observations so far show limited inflationary impact, but risks of price pressure and slowed growth remain. He stressed that durability of inflation moderation is essential before rate adjustments.

🔎 Market Outlook & Next Steps

Market sentiment: Futures currently bake in a late 2025 cut, likely September, rather than July.
Forthcoming dates to watch:
- July 9 – Tariff schedule update and its inflation implications.
- July 29–30 – Next FOMC meeting, where divergence in viewpoints may shape official projections.

🧭 Key Takeaways

Powell’s message: data first, cuts later.
Fed split: tension between inflation vigilance vs. pre‑emptive support for job market.
Trump tensions: political pressure intensifies as markets await further clarity.
Tariff uncertainty: a central unknown that could tip the scales.