Trump pressures for rate cuts, but Chair Powell stands firm in holding rates steady
From Yahoo Finance: 2025-07-01 10:15:00
Federal Reserve Chair Jerome Powell maintains that the central bank will keep rates on hold amid scrutiny from the White House over tariffs’ impact on the economy. Powell predicts U.S. inflation to rise, but will wait to assess tariff effects before adjusting rates. Trump continues to pressure Powell for rate cuts.
Powell emphasizes the need for caution in waiting to assess tariff impacts on the economy. Despite Trump’s push for rate cuts, Powell affirms the Fed’s stance on holding rates steady until the effects of tariffs become clearer. Economists anticipate no rate cuts until September.
Powell acknowledges the potential for a rate cut at the Fed’s July meeting but remains noncommittal. Trump’s criticisms escalate to the entire Fed governing board, increasing pressure on individual officials. Powell remains focused on fulfilling the Fed’s economic objectives amidst political pressures.
Central bankers including Christine Lagarde applaud Powell’s commitment to economic stability. Trump urges Fed rate cuts to reduce borrowing costs, comparing U.S. rates to other countries. Powell’s term ends in 2026, with potential successors facing increased scrutiny due to Trump’s criticisms.
Trump’s focus on Fed rate cuts to reduce government borrowing costs contrasts with the Fed’s cautious approach to assessing economic impacts. Powell maintains that a rate cut wouldn’t necessarily lower other borrowing costs, such as mortgages or car loans. The Fed’s short-term rate remains unchanged this year.
Powell suggests the Fed will monitor the impact of tariffs on inflation over the summer before considering rate adjustments. Fed governors Waller and Bowman hint at supporting rate cuts, despite the Fed’s cautious approach. Inflation remains stable despite tariffs, with consumer prices up just 2.4% in May.
Read more: As Trump ramps up attacks on the Federal Reserve, Chair Powell refuses to change course