Overview

• Powell told Congress that policy decisions will be driven by incoming economic data rather than political pressure from Trump’s calls for steeper cuts
• Governors Michelle Bowman and Christopher Waller, both Trump appointees, have publicly backed a July rate cut if inflation stays low, while other Fed officials remain wary of more persistent tariff-driven price increases
• The Fed’s benchmark rate has been unchanged at 4.25%-4.50% since December after three reductions last year, and officials’ median forecasts still project two quarter-point cuts by year-end
• Investors have scaled back odds of a July reduction to around 23% and now see roughly a 75% chance of the first cut in September, according to futures markets
• Powell emphasized that the economy is in a solid position with low unemployment and inflation below recent peaks, even as tariff uncertainty keeps the Fed on hold