Fed’s Powell brings blunt message to Congress on interest rates this week

The Greek chorus of Fed watchers calling for an immediate interest rate cut this summer is growing.

This may include your household as it is battered by high mortgage bills and credit-card rates plus disappointing 401(k)s.

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The loudest critic of the Federal Reserve Bank happens to have the world’s largest microphone.

Related: Fed official makes surprising interest rate cut prediction

President Donald Trump and his supporters have been demanding a significant rate cut as soon as July.

This is, in part, Trump said, to restart the stagnant housing market and keep the U.S. economy from slipping into a recession.

Federal Reserve Board Chair Jerome Powell defends keeping the Federal Funds Rate steady in June.

Saying the economy is solid, he is supporting a “wait-and-see” forecast until the full of expected tariff inflation passes through inflation and employment numbers over the next three months.

Jerome Powell, chairman of the US Federal Reserve, is on the hot seat over interest rate policy this year.

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Fed officials send mixed reactions on 2025 rate cut forecasts

The Fed’s dual mandate: prudent monetary policy that keeps both inflation and unemployment relatively low to avoid a recession or worse.

The Federal Open Meeting Committee controls the Federal Funds Rate, which banks charge each other overnight to borrow money.

The funds rate is tied to the cost of borrowing money for consumers, investors and businesses.

The Federal Open Meeting Committee said July 19 it would keep the Federal Funds Rate at 4.25% to 4.50% for June.

Data over the next few months will indicate if the Fed will decide on two or fewer rate cuts in 2025, portfolio manager Chris Versace said in a TheStreet Pro post after the FOMC released its quarterly “dot plot” on July 18.

The Fed continues “to telegraph that two 25-basis point rate cuts remain on the table for this year,’’ Versace wrote.

Both Fed and market watchers forecast the next probable rate cut could appear at the September FOMC meeting.

Related: Fed official predicts when to expect interest rate cuts

San Francisco Federal Reserve Bank President Mary Daly said July 20 that the next probable rate cut could happen in the fall.

Monetary policy is in “a good place, Daly said, adding that inflation is coming down, which is “great news for American families.”

Her comments came hours after Fed Governor Christopher Waller also said in a CNBC interview that a funds rate cut could come as early as the Fed’s July 29-30 meeting.

Waller’s comments initially zapped some economists and analysts as a bit pre-emptive.

The widely watched CME FedWatch tool puts the likelihood of a July cut in the Federal Funds Rate at 10.3%.

The current economic data “has been fine” and the expected tariff inflation bump may follow historical trends to prove transitory in the short term, Waller said.

But both Daly and Waller said the tariff impact on the jobs market will need to be monitored to ensure it doesn’t cause the unemployment rate to rise.

Trump’s proposed tariffs – essentially an external sales tax to U.S. trading partners that we pay one way or another – face a July 9 deadline.

Powell appears before Senate Banking panel today

Trump, prior to the nuclear strikes on Iran, excoriated Powell in one of the president’s longest Truth Social screeds in a while for keeping the funds rate steady:

“…If he reduced them to the number they should be, 1% to 2%, that “numbskull” would be saving the United States of America up to $1 Trillion Dollars per year.

“…He’s a dumb guy and an obvious Trump hater, who should have never been there.”

Trump appointed Powell to a 10-year term on the Fed Board of Governors in 2016. Powell was elected chair by the Board of Governors of the FOMC in 2018.

Neither the president nor Congress can replace the Fed Chair. 

Trump, in recent months, has threatened to install a “shadow” chair until Powell resigns or leaves in May 2026. In addition to musings that perhaps Trump would appoint himself (which he legally can’t), Treasury Secretary Scott Bessent is also a recent frontrunner whispered to soon join the Fed board.

Powell has said he has no intention of resigning early.

When asked for a reaction to Trump’s vitriolic name-calling at a July 18 press conference, Powell deftly swerved and lobbed a “no comment” comment to reporters.

More Federal Reserve:

Fed interest rate cut decision resets forecasts for the rest of this yearFederal Reserve prepares strong message on long-term interest ratesFed official revamps interest-rate cut forecast for this year

Powell presents the bi-annual Monetary Policy Report to Congress to the GOP-led Senate Banking Committee June 23.

The report confirms Powell’s assertions that the U.S. economy is in a resilient, pre-tariff status for the first six months of the year.

“Moreover, sustainably achieving maximum employment and price stability depends on a stable financial system,’’ the report said.

“Therefore, the (FOMC) policy decisions reflect its longer-run goals, its medium-term outlook, and its assessments of the balance of risks, including risks to the financial system that could impede the attainment of the Committee’s goals,” the report said.

Related: Fed official revamps interest-rate cut forecast for rest of this year