Despite intense pressure from the White House, Powell continues to preach patience when it comes to future cuts

Despite constant pressure from the Trump administration to cut interest rates, the chairman of the Federal Reserve seemed unfazed on Tuesday when speaking at a European Central Bank forum.
Jerome Powell, chairman of the Federal Reserve, indicated that the central bank still wanted to see the effects of potential tariffs before moving forward on future rate cuts.
In response to a question as to whether the Fed would have cut by now if not for the tariffs, he said, “I think that’s right.”
“We went on hold when we saw the size of the tariffs,” Powell continued. “All inflation forecasts for the United States went up materially as a consequence of the tariffs. We didn’t overreact; in fact, we didn’t react at all. We’re simply taking some time. As long as the US economy is in solid shape, we think the prudent thing to do is to wait and learn more, and see what those effects might be. They haven’t really shown up, so, for now, we’re waiting.”
However, Powell didn’t rule out beginning to cut rates again in July. When asked if July was too soon to consider a rate cut, Powell said, “I really can’t say.”
“It’s going to depend on the data. We are going meeting by meeting. I wouldn’t take any meeting off the table or put it directly on the table. It’s going to depend on how the data evolves.”
According to Reuters, short-term interest-rate futures showed about a one-in-four chance for a rate cut in July after Powell’s comments. CME FedWatch puts the chances of a rate cut at 21.2%, up slightly from yesterday.
Response from Trump administration
Powell stated that the economy had yet to experience any impacts from the Trump administration’s tariffs, but that he still expected some impact to emerge over the summer.
“The US economy is in a pretty good position,” Powell said. “Inflation has come down. We’re healthy overall. If you ignore the tariffs for a second, inflation is behaving pretty much exactly as we have expected and hoped that it would. We haven’t seen effects much yet from tariffs, and we didn’t expect to by now. We’ve always said that the timing, amount, and persistence of the inflation would be highly uncertain.
“We’re watching. We expect to see over the summer some higher readings. But we’re prepared to learn. It could be higher or lower, or later, or sooner than we expected.”
As expected, the Trump administration responded swiftly to Powell's comments. William J. Pulte, head of the Federal Housing Finance Agency (FHFA), expressed his views on his X account. In response to a post stating that Powell was calling for higher inflation readings this summer, Pulte responded with “Moron.”
Moron https://t.co/bhDulaQMPe
— Pulte (@pulte) July 1, 2025
He had additional thoughts in a previous post, also blaming the Biden administration for inflation and increased mortgage costs.
“Jerome Powell’s tenure as Fed Chair has been a masterclass in economic Mismanagement,” Pulte said on X. “Under Biden, his Reckless money-printing fueled 40-year-high inflation, doubled mortgage payments, and triggered historic bank collapses like SVB—leaving retirees and homeowners holding the bag.”
Powell’s future unclear
Powell was asked at the event about the criticism he has faced from the Trump administration.
“I’m very focused on just doing my job,” Powell said. “The things that matter are using our tools to achieve the goals that Congress has given us: maximum employment, price stability, financial stability. That’s what we focus on, 100%.”
He also went on to say that while the debt level in the United States was sustainable, the fiscal path the country was on was not.
“That is the one thing that I have said and my predecessors have also said and that is the US federal fiscal path is not a sustainable one. The level of the debt is sustainable, but the path is not. We need to address that sooner or later, sooner is better than later.”
He agrees with other members of the Fed that as long as inflation remains in check, they will be able to begin reducing rates again later this year.
“A solid majority of FOMC participants do expect that it will become appropriate later this year to begin to reduce rates again,” he said. “That will depend … on the incoming data. We’ll be monitoring particularly what does show up in terms of inflation or what does not show up. And also carefully watching the labor market. We watch very carefully for signs of unexpected weakness.
“A majority of us do feel it will be appropriate in the remaining four meetings of the year to begin to reduce rates again.”
With approximately 10 months left on his term as chair, Powell said he wants to ensure that the next chair starts with a solid economy.
“I want to hand over to my successor an economy in good shape,” Powell said. “That’s what keeps me awake at night. Are we on a path to do that, and how do we get that done?”
When asked if he planned on staying on as a Fed governor after his chair term expires, Powell said, “I have nothing for you on that today.”
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