Federal Reserve Chair Jerome Powell will tell lawmakers Tuesday that the central bank is in no rush to lower interest rates, underscoring a cautious stance as officials await more clarity on the economic impact of President Donald Trump’s latest round of tariffs.
Powell’s cautious stance drew sharp criticism from Trump ahead of Powell’s semiannual testimony to Congress. In an early morning post on Truth Social, Trump lashed out at Powell by name, accusing him of ignoring the economic benefits of lower borrowing costs.
Powell’s message, which will be delivered in testimony before the House Financial Services Committee on Tuesday, reflects growing divisions within the Federal Open Market Committee — the chief monetary policymaking body within the Federal Reserve.
In prepared remarks obtained by reporters, Powell will reiterate that the Fed “can afford to exercise patience before reducing interest rates as they monitor the impact of President Trump’s policies, including tariffs, on inflation and the job market.”
He will describe the labor market as strong and inflation as “somewhat elevated,” citing continued uncertainty over how policy shifts will ripple through the broader economy.
“The effects of tariffs will depend, among other things, on their ultimate level,” Powell is expected to say.
“For now, we are well-positioned to wait for more information about the probable trajectory of the economy before contemplating any modifications to our policy approach.”
Powell will acknowledge that this year’s tariff increases are likely to exert upward pressure on prices and drag on growth, but he will stress that the Fed is not yet convinced the effects will be long-lasting.
“Keeping longer-term inflation expectations anchored is essential,” Powell will tell lawmakers, warning that the inflationary impact of tariffs could be either short-lived or more persistent, depending on their scope and duration.
“‘Too Late’ Jerome Powell, of the Fed, will be in Congress today in order to explain, among other things, why he is refusing to lower the Rate. Europe has had 10 cuts, we have had ZERO,” Trump wrote on his social network.
“No inflation, great economy — We should be at least two to three points lower. Would save the USA 800 Billion Dollars Per Year, plus. What a difference this would make.”
The president also attacked Powell personally, writing: “If things later change to the negative, increase the Rate. I hope Congress really works this very dumb, hardheaded person, over. We will be paying for his incompetence for many years to come.”
Trump ended the Truth Social post by writing: “THE BOARD SHOULD ACTIVATE. MAKE AMERICA GREAT AGAIN!”
While Powell emphasizes patience, Fed governors Michelle Bowman and Christopher Waller have signaled support for a rate cut as soon as the next policy meeting in July.
“It is likely that the impact of tariffs on inflation may take longer, be more delayed, and have a smaller effect than initially expected,” Bowman told a gathering in Prague on Monday.
“Should inflation pressures remain contained, I would support lowering the policy rate as soon as our next meeting,” she added, referring to the upcoming July 29–30 meeting of the FOMC.
Bowman, who was recently named vice chair for supervision, suggested that her focus has shifted to possible labor market weaknesses.
“If inflationary pressures remain subdued, I would advocate for a reduction in the policy rate as early as our next meeting to align it closer to its neutral level and maintain a robust labor market,” she said on Monday.
Waller echoed Bowman’s position in a CNBC interview, urging the Fed to act quickly.
“I don’t think any tariff-induced inflation will be significant, and we should overlook it when establishing our policy,” he said.
Waller pointed to recent data showing inflation trends as favorable and warned against delaying action until the labor market shows signs of deterioration.
“If you’re starting to worry about the downside risk to the labor market, move now, don’t wait,” he said.
Meanwhile, Richmond Fed President Tom Barkin struck a more optimistic but still measured tone, noting that while inflation is cooling, the Fed’s work is not yet done.
“We still have more work to do since inflation is not yet back to target,” Barkin said in recent remarks. While he left the door open to modest rate reductions, he emphasized the need to remain vigilant.
The diverging views among Fed officials reflect the complex challenge facing policymakers as they confront renewed trade uncertainty, persistent inflation and a labor market that continues to defy expectations.
