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6h ago

Powell Holds Off on Rate Cuts Pending Tariff Impact Analysis

Uncertainty over how President Trump’s tariffs will affect inflation has prompted the Fed to pause rate decisions.

Federal Reserve Board Chairman Jerome Powell speaks during a news conference at the Federal Reserve in Washington, Wednesday, June 18, 2025. (AP Photo/Mark Schiefelbein)
Jerome Powell is one of over a dozen central bank executives that vote on the bank's interest rate, and he is the head of the Federal Open Market Committee.
Federal Reserve governor Michelle Bowman said if inflationary pressures remain contained, she would support a rate cut next month.
U.S. Federal Reserve vice-chair Michelle Bowman says she is growing more concerned with risks to the job market than with the potential inflationary effects of tariffs.

Overview

  • Jerome Powell told the House Financial Services Committee that the Fed will wait for clearer data on tariff-driven price pressures before considering cuts to the federal funds rate.
  • Two Trump-appointed governors, Michelle Bowman and Christopher Waller, have signaled they would support a rate cut as soon as the Fed’s July meeting.
  • The Fed’s latest dot plot reveals a split among officials, with roughly half projecting at least two quarter-point cuts this year and the rest expecting rates to stay at 4.25%–4.5%.
  • Powell emphasized that the U.S. economy remains in a solid position with low unemployment and a 2.4% annual inflation rate, warning that tariff effects could prove either temporary or persistent.
  • President Trump has intensified personal attacks on Powell, calling him “dumb” and demanding rate cuts of two to three percentage points to reduce government borrowing costs.