Fed Chair Powell Rejects July Rate Cut Amid Tariff Inflation Concerns

Federal Reserve Chairman Jerome Powell stated he does not plan to cut interest rates in July, emphasizing a wait-and-see approach to assess the economy amid uncertainty from President Donald Trump's tariffs. Powell acknowledged tariffs could cause either short-lived or more persistent inflation but stressed the importance of maintaining price stability to support long-term employment. This position contrasts with calls for immediate rate cuts from Trump and some Fed board members like Christopher Waller and Michelle Bowman, who argue that lower rates could sustain a healthy labor market if inflation remains low. Trump has strongly criticized Powell on social media for not lowering rates, urging Congress to challenge him. Powell's testimony highlights ongoing tensions within the Fed and between the central bank and the administration, as policymakers balance inflation risks and economic growth. Meanwhile, Trump's public appeals for significant rate reductions underscore a fundamental disagreement on monetary policy between the White House and the Fed.