Powell Says Fed Will Hold Rates Despite Trump Pressure/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Federal Reserve Chair Jerome Powell told Congress Tuesday that the Fed will wait for more economic data before cutting interest rates, defying President Trump’s demand for immediate action. The Fed remains cautious amid inflation risk from tariffs, even as some officials signal possible July cuts. Powell faces intense scrutiny as economic forecasts and political pressure collide.
Powell Says Fed Will Hold Rates Despite Trump Pressure: Quick Looks
- Fed Chair Powell shifts tone: “Well positioned to wait” before cutting rates
- Trump ramped up criticism, calling Powell “incompetent” and urging Congress action
- Fed unanimously kept rates unchanged last week; internal forecasts show mixed views
- Inflation concerns remain due to potential tariff-driven price spikes
- Despite Trump’s push, Fed focuses solely on economic health, not government debt
- ECB has cut rates eight times compared to Fed’s three last year
- Key Fed voices Bowman and Waller open to July cuts, bucking Powell’s restraint
- CPI held steady at 2.4% year-over-year, with mixed price movements
Powell Says Fed Will Hold Rates Despite Trump Pressure
Deep Look
Washington, D.C. — June 24, 2025
Federal Reserve Chair Jerome Powell affirmed Tuesday that the U.S. central bank will continue monitoring economic developments and hold off on interest rate cuts—a stance at odds with President Trump’s demand for a policy pivot. Powell made the remark during testimony to the House Financial Services Committee, delivering measured comments amid rising political pressure.
Waiting for Data, Despite Presidential Pushbacks
In prepared remarks, Powell stated, “For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments.” This cautious tone contrasts sharply with President Trump’s messaging, which ramped up early Tuesday in a social media post attacking Powell’s management and urging congressional intervention.
Several Republicans did question Powell about why the central bank hasn’t yet moved to lower borrowing costs. Powell responded that most economists, inside and outside the Fed, still expect tariffs to push inflation higher, and Fed policymakers want to see what happens over the next couple of months before making any changes.
“We really don’t know how much of that’s going to be passed through the consumer,” Powell said, referring to the duties. “We have to wait and see.”
Some Republicans also praised Powell for remaining focused on the Fed’s mission to lower prices and support maximum employment. Rep. French Hill, the Arkansas Republican who chairs the committee, thanked Powell for keeping “politics out of the Fed” by disbanding several committees that focused on finance and climate change.
Rep. Josh Gottheimer, a Democrat from New Jersey, asked Powell whether Trump’s “bullying” would impact the Fed’s decision-making.
Powell said the Fed wants to “deliver a good economy for the benefit of the American people, and that’s it.”
“Anything else is kind of a distraction,” Powell added. “We always do what we think is the right thing to do, and we live with the consequences. I don’t know how else to do the job.”
Powell also told the committee that “ increases in tariffs this year are likely to push up prices and weigh on economic activity.”
He said the bump to inflation from tariffs could be temporary, or it could lead to a more persistent bout of inflation.
The Fed’s “obligation,” Powell said, “is … to prevent a one-time increase in the price level from becoming an ongoing inflation problem.”
Divided Fed Outlook
Last week, the 19-member Federal Open Market Committee voted unanimously to maintain current interest rates. But internal forecasts reveal internal divisions: seven officials anticipate no rate reductions this year, two see just one, and ten expect at least two cuts.
Powell hinted that the Fed might not move before September. Meanwhile, Federal Reserve governors Michelle Bowman and Christopher Waller, both appointed by Trump, signaled openness to a potential July cut—contradicting Powell’s conservative timeline.
Tariff Worries and Inflation Risk
Powell emphasized the role of tariffs in his remarks. He warned that recent import duties—30% on Chinese goods, 50% on steel and aluminum, and 25% on autos—could fuel inflation, either briefly or more persistently. Powell noted the Fed’s duty to prevent a one-time price hike from becoming entrenched, suggesting caution in policy decisions.
In contrast, President Trump argues for rate cuts to lower federal borrowing costs and boost growth. However, portions of the Fed leadership maintain that managing government debt is outside their remit, with Waller pointing to Congress as responsible for fiscal decisions.
Inflation and Employment Stay Balanced
Recent data shows the consumer price index climbed modestly—0.1% from April to May—with core inflation holding steady at 2.4%. CPI year-over-year also edged up to 2.4%. Despite concerns over tariffs, cooling service sector inflation—such as airfare and hotel prices—has offset increases in consumer goods.
The labor market remains resilient: May’s employment report showed 139,000 new jobs and a 4.2% unemployment rate—healthy indicators alongside cautious inflation.
Political Crossroads
Powell’s testimony arrives as President Trump amplifies voices within Treasury and the Fed calling for economic stimulus through rate cuts. In turn, Powell leans on his prior bipartisan support from Congress as protection against political influence.
Still, internal Fed dynamics are in flux. Officials like Waller and Bowman may draw criticism if they pursue cuts too early, potentially derailing Powell’s carefully timed strategy.
Bottom Line
With economic signals mixed—strong labor, balanced inflation, but tariff uncertainty—the Federal Reserve is caught between political demands for rate relief and its mandate to stabilize prices. Powell’s message: data first, decisions later. Markets, meanwhile, await clarity on whether July marks a turning point—or if the Fed stays its careful, cautious course.
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