By Chris Rugaber of AP Economics Writer
WASHINGTON (AP) — The Federal Reserve continues to wait and see how the economy evolves before deciding whether to cut key interest rates, Chairman Jerome Powell said Tuesday that it is directly at odds with President Donald Trump’s demand for immediate cuts.
“For the time being, we are well positioned to wait to learn more about possible economic courses before considering adjusting our policy attitude,” Powell said in a prepared statement to be offered Tuesday before the House Financial Services Committee.
Powell faces two days of tough grilling at Capitol Hill. Powell is often faced with calm criticism before the House and Senate committees, or at least, the Senate committees overseeing the Fed. Powell has also often cited his support in Congress as a breakwater against Trump’s attacks, but his support could decline under the president’s ongoing attacks.
Trump again assaulted him early Tuesday, posting on his social media site. “I hope Congress really does well with this stupid, solid person.
Federal Reserve Chairman Jerome Powell will speak at a press conference in Washington’s Federal Reserve on Wednesday, June 18th, 2025 (AP Photo/Mark Sieffelvein)
Federal Reserve Chairman Jerome Powell will speak at a press conference in Washington’s Federal Reserve on Wednesday, June 18th, 2025 (AP Photo/Mark Sieffelvein)
Federal Reserve Chairman Jerome Powell will speak at a press conference in Washington’s Federal Reserve on Wednesday, June 18th, 2025 (AP Photo/Mark Sieffelvein)
President Donald Trump will speak with reporters before riding Marines on the South Lawn of the White House in Washington on Tuesday, June 24, 2025. (AP Photo/Evan Vucci)
President Donald Trump will speak with reporters before riding Marines on the South Lawn of the White House in Washington on Tuesday, June 24, 2025. (AP Photo/Evan Vucci)
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Federal Reserve Chairman Jerome Powell will speak at a press conference in Washington’s Federal Reserve on Wednesday, June 18th, 2025 (AP Photo/Mark Sieffelvein)
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When Powell last appeared before Congress in February, French Hill, an Arkansas Republican who chairs the Financial Services Committee, urged Powell to return inflation to the Fed’s target, which normally requires interest rates to be maintained.
“The increase in tariffs this year is likely to boost prices and consider economic activity,” Powell said in his written testimony.
He said the bump from tariffs to inflation could be temporary or could lead to a more permanent match of inflation.
The Fed’s “duty” is to “prevent one-time price levels from rising to becoming an ongoing inflation problem,” Powell said.
The Fed’s 19-member interest rate setting committee, led by the chairman, will decide whether to cut or reduce borrowing costs. They usually increase rates to cool the economy and combat inflation or prevent it, boosting borrowing and spending when the economy is weak.
The Fed’s committee last week gathered votes every week to avoid changing key rates, but the Fed also released forecasts for future interest rate cuts, revealing new sectors among policymakers. Seven rate cuts were projected this year, with only two predicting one and 10 predicting at least two reductions.
At a press conference last week, Powell proposed that the Fed should monitor how the economy evolves over the summer, in response to Trump’s tariffs and other policies before deciding whether to cut fees. His comments suggested that rate cuts would not occur until September.
But two well-known members of the Fed’s management board, Michelle Bowman and Christopher Waller, have since suggested that the central bank could cut its fees as soon as possible at the next meeting in July. Both officials are appointed by Trump during his first term, and Waller is often referred to as a potential alternative to Powell when his term ends in the following May. Powell was also appointed by Trump in late 2017.
Trump is urging the Fed to cut fees to save US government money in order to attach US government interest payments to vast national debt. However, the Fed has long resisted considering government funding costs when making interest rate decisions, and prefers to focus instead on the health of the economy and inflation.
In a TV interview on Friday, Waller said it was “not our job” to lower government borrowing costs, adding that it would be up to Congress and the White House to reduce the budget deficit.
Meanwhile, Trump reiterated his claim on social media on Tuesday that the European Central Bank lowered its key rate 10 times, but the Fed hasn’t cut it at all. In fact, the ECB has lowered that rate eight times in the last 12 months, and the Fed has made it three times at the end of last year.
Last year’s Fed cuts reduced that rate to around 4.3%. But since then, they have reduced the suspension due to concerns that Trump’s tariffs could boost inflation. The President fulfilled his 10% obligation on all imports, imposing an additional 30% on goods from China, 50% on steel and aluminum, and 25% on automobiles.
However, despite widespread concern among economists about the impact of tariffs, inflation has been steadily cooling this year. The consumer price index reached just 0.1% between April and May, the government said last week that price pressure would be curtailed.
Prices for some products rose last month, but the costs of many services, such as airfares and hotels, offsetting the impact of tariffs. Compared to a year ago, prices rose 2.4% in May, up from 2.3% in April.
Original issue: June 24th, 2025 9:21am EDT
