Federal Reserve Chair Jerome Powell is taking a cautious approach to interest-rate cuts as he prepares for congressional testimony, despite pressure from President Trump and signs of differing views within the Fed. In his prepared remarks, Powell said the Fed will wait for clearer evidence on how trade disputes affect the economy before making changes to policy. He warned that tariffs could push inflation higher and slow overall economic activity.
The Fed has left rates unchanged for four straight meetings, with the last reduction occurring in December. That steady stance has drawn criticism from President Trump, who used Truth Social to urge Republican lawmakers to press Powell during the hearings, calling him “very dumb” and “hardheaded.” Trump argues that inflation is low, borrowing costs remain too high, and elevated interest rates are raising the federal government’s debt-service expenses.
Within the Fed, views are not uniform. Two governors appointed during Trump’s first term—Chris Waller and Michelle Bowman—have indicated they might support a rate cut at the July 29–30 meeting. Both have suggested tariff-driven inflation could prove temporary, while voicing greater concern about signs of a weakening labor market. Federal Reserve projections show inflation rising toward 3% in 2025 before gradually moving back to the 2% target by 2027.
Powell’s leadership term as chair is set to expire in May. Observers have named Waller as a possible successor, reflecting how internal Fed dynamics and differing assessments of the outlook could shape future policy decisions. For now, Powell’s emphasis remains on gathering more data and monitoring the economic effects of trade tensions before altering the current stance on interest rates.