Fed Chair Powell signals patience as he told Congress on Tuesday the Federal Reserve is not yet ready to cut interest rates. Instead, he said the central bank will wait for more economic data before making any decision.
Powell testified before the House Financial Services Committee, explaining that current conditions call for caution. He stressed that the Fed wants to see how inflation and consumer spending behave over the summer.
The message contrasts sharply with recent pressure from President Donald Trump. On Tuesday, Trump posted a scathing message on social media calling Powell “hardheaded” and demanding immediate action on rates.
Despite this, Powell said the Fed will continue to do what it believes is best for the economy. He emphasized the importance of staying focused on long-term goals, not short-term political demands.
Several Republican lawmakers asked why rates haven’t been lowered already. Powell responded that the full impact of tariffs remains unclear. Some price increases may be temporary, he said, while others could last longer.
“We don’t know how much of the tariff cost will reach consumers,” he told lawmakers. “We have to wait and see.”
Fed Chair Powell signals patience even as pressure mounts from both politicians and markets. Still, some Republican members thanked him for removing political distractions, such as Fed committees tied to climate change. Democrats raised concerns about political influence. Powell answered firmly, saying the Fed focuses only on the economic well-being of the American people.
The Fed’s most recent decision kept interest rates steady at about 4.3%. However, internal forecasts show divisions. While many officials expect cuts later in the year, others want to hold rates steady for now.
Two Fed board members, both appointed by Trump, have suggested a cut could come as early as July. Powell, however, maintained that decisions will be driven by data not political pressure.
Fed Chair Powell signals patience as inflation trends remain mild. The latest consumer price report showed only a 0.1% increase from April to May. Yearly inflation ticked up to 2.4%, easing concerns about runaway prices.In closing, Powell reaffirmed the Fed’s commitment to its dual mandate controlling inflation while supporting maximum employment.
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