Briefing at a Glance:

  • Federal Reserve Chair Jerome Powell said Tuesday that the central bank is in no hurry to cut its key interest rate, responding to President Donald Trump's pressure for reductions of up to three percentage points.
  • "For now, we are in a good position to wait for more information about where the economy is headed before considering adjustments to our policy stance," Powell said in congressional testimony, citing the inflationary impact of tariffs while noting solid growth and a healthy job market.
  • Powell said policymakers will carefully assess the latest inflation data and did not rule out a rate cut at the next Fed meeting on July 29-30. "If it turns out that inflation pressures are indeed under control, then we would be in a phase of cutting rates sooner rather than later," he said. "But I don't want to point to any specific meeting."

In-Depth Analysis:

The Fed held its benchmark rate steady on June 18 for the fourth consecutive policy meeting, and its median projections showed central bank officials expect two quarter-point cuts by the end of 2025.

Still, Fed officials remain broadly divided over the likely path of borrowing costs this year. Ten expect at least two cuts, two expect one cut, and seven expect no change.

Since the June meeting, two policymakers have said they might lean toward a quarter-point cut at the July meeting, citing warnings that the labor market could weaken while noting that inflation has cooled.

"If inflation pressures remain contained, I would support lowering the policy rate as soon as the next meeting to bring it closer to neutral and maintain a healthy labor market," Fed Vice Chair for Supervision Michelle Bowman said Monday.

Bowman and Fed Governor Christopher Waller—who said Friday he would be open to a cut next month—were both nominated to the Fed by Trump.

After weeks of calling on Powell to cut rates, the president has recently intensified pressure, joined by Vice President JD Vance, Commerce Secretary Howard Lutnick, and National Economic Council Director Kevin Hassett.

"No inflation, economy is great—we should be at least two to three points lower," Trump said in a social media post Tuesday.

"That would save $800 billion a year for the United States, maybe more," Trump said before Powell testified before the House Financial Services Committee.

"I want Congress to really go after this very stupid, stubborn person," the president said. "We will pay for his incompetence for years."

Concerns about tariffs and inflation eroded consumer economic confidence this month, according to a survey released Tuesday by The Conference Board. Consumer outlooks unexpectedly darkened across all age and income groups, and regardless of political affiliation.

"Tariffs remain the top concern for consumers and are frequently linked to worries about negative economic impacts," Stephanie Guichard, senior economist for global indicators at The Conference Board, said in a statement.