Federal Reserve Chair Jerome Powell defended the central bank’s June 18 decision to hold short-term interest rates steady while answering questions from lawmakers during a House Financial Services Committee hearing on June 24.

The economy is “in a solid position,” Powell said, but uncertainty remains, particularly about trade policy impacts. The Fed will continue to exercise caution as its members wait to see how the tariffs introduced earlier this year by President Donald Trump impact inflation.

“For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance,” Powell said.

The future is unwritten: If inflation doesn’t spike in response to tariffs or if the labor market weakens, “that would tend to suggest cutting sooner,” Powell said. If the opposite occurs, there would be less urgency for rate cuts.

“We’re just trying to be careful and cautious, and we really think that’s the best thing we can do for the people that we serve,” Powell said. The Fed is “in a difficult situation in deciding exactly when to move,” he added before reiterating that inflation levels will help guide their decisions.

Disagreement at the Fed? Following the Fed’s decision last week, Fed Governor Christopher Waller publicly pushed for a rate cut to occur soon, telling CNBC, “I think we’re in that position that we could do this as early as July.”

While at a conference in Prague on June 23, Fed Governor Michelle Bowman similarly voiced support for a possible July rate cut if inflation doesn’t surge, though she said she supported the Fed’s most recent decision to leave rates unchanged.

Powell declined to comment on his colleagues’ remarks but told the committee that he doesn’t think the Fed needs “to be in any rush” and “wouldn’t want to point to a particular meeting” when a rate cut could occur.

“What will actually happen with rates is going to depend on the path of the economy, and that’s highly uncertain,” Powell said. “So I would just say what that means at this moment in time is that a significant majority of the committee — but also there’s a pretty significant minority that doesn’t agree — but a significant majority feels it will be appropriate to reduce rates later this year.”

The ‘best thing’ for housing: Powell echoed comments he made last week about the housing market facing both long-term and short-term challenges. While he said the Fed can’t do much about the long-term housing shortage issue, it can help address high rates over time.

“The best thing we can do for the housing market — the absolute best thing — is to restore price stability so that rates come down,” he said.

Political pressures continue: Trump renewed past criticisms of Powell ahead of the June 23 hearing, writing on Truth Social that the Fed chair was “refusing to lower the Rate” and that the U.S. “will be paying for his incompetence for many years to come.”

Federal Housing Finance Agency Director Bill Pulte, who called for Powell to resign last week, also posted new remarks on social media alleging that rate decisions “are not based on data but instead on Powell’s politicization of the Fed.”

Powell has previously indicated that demands made by Trump and others within his administration do not impact the Fed’s decisions on monetary policy.

The context: Powell’s testimony comes amid an emerging split within the Fed. Two officials, Christopher Waller and Michelle Bowman, have said rates could fall as soon as July. But Powell and others remain cautious, awaiting clearer data.

He added the Fed is “perfectly open” to the idea that the pass-through to consumers “will be less than we think.”

He said inflation is expected to begin rising this summer, and that upcoming data for June and July will be key. “We do expect [inflation] to move [up] in the summer… if we see it not happening, we will learn from that,” Powell said.

The news: Federal Reserve Chair Jerome Powell told Congress the central bank is in no rush to cut interest rates, citing a strong labour market and uncertainty over the inflationary effects of President Donald Trump’s tariffs.

The Fed held rates steady last week at 4.25–4.5%.

Powell also said changes to a key bank capital rule, the enhanced supplementary leverage ratio, could help banks better intermediate in the US Treasuries market.

The proposal would cut capital requirements for the biggest lenders by up to 1.5 percentage points. Regulators are expected to release the plan this week, aiming to ease pressure on banks during times of market stress.

What they said: “When the leverage ratio is binding, it discourages banks from undertaking low-margin, fairly safe activities such as mediation in the Treasury markets,” Powell said at the hearing. “This should encourage more mediation.”

Powell said interest rates were at a “modestly restrictive” level, signalling the economic conditions needed for earlier cuts.

“If we were to see that inflation is not coming through as our forecasting … have suggested, that would push us in the direction of being able to cut sooner. Also, if the labour market were to weaken, that would push us in the direction of being able to cut sooner,” he said.

“If the opposite happens, if the labour market remains strong and we do see higher inflation, I think we will still get around to cutting but it would be later, rather than sooner.”

Meanwhile, New York Fed President John Williams said he expects “uncertainty and tariffs to restrain spending and reduced immigration to slow labour force growth,” projecting growth to slow to around 1%, inflation to rise to 3% and unemployment to reach 4.5% by year’s end.

Atlanta Fed President Raphael Bostic told Reuters “there’s no rush” to cut rates, citing stable job markets and businesses planning price hikes in response to tariffs. “The question is not whether but when,” he said about higher prices, noting firms had nearly exhausted strategies to avoid passing on costs and he expects only a single rate cut late in 2025.

Cleveland’s Beth Hammack in a speech said she sees no “weakening in the economy that would merit imminent rate cuts,” adding policy may stay on hold “for quite some time.”

However, Powell acknowledged that the central bank could cut rates sooner in case inflation does not heat up, or the labor market weakens enough.

Federal Reserve Chair Jerome Powell on Tuesday told Congress that the central bank is “well positioned to wait” as far as interest rate cuts are concerned, reiterating his previous stance.

“Increases in tariffs this year are likely to push up prices and weigh on economic activity,” Powell said during his testimony before the House Committee on Financial Services.

The Federal Open Market Committee (FOMC) kept interest rates unchanged last week, maintaining the key borrowing rate in the 4.25% to 4.5% range.

He added that the Fed will chalk out the adjustments needed to its rate policy once it learns more about the course of the economy. However, he stopped short of explaining how long it will take the central bank to take a call in this regard.

“The effects on inflation could be short lived – reflecting a one-time shift in the price level. It is also possible that the inflationary effects could instead be more persistent,” he added, in a clear sign that the Fed is continuing with its wait-and-watch approach.

However, Powell acknowledged that the central bank could cut rates sooner in case inflation does not heat up, or if the labor market weakens enough.

As for whether the Fed would cut rates twice this year, Powell did not make a commitment.

“What will happen with rates is dependent on the economy, and that is highly uncertain,” he said.

This comes after President Trump lashed out at Powell again on Tuesday ahead of the Fed Chair’s testimony in Congress.

“I hope Congress really works this very dumb, hardheaded person,” the President said in a post on Truth Social.

The FOMC’s projections point to stagflationary pressures on the economy, with inflation expected to reach 3% in 2025, while the gross domestic product (GDP) is projected to grow at just 1.4%.

Earlier in the day, Atlanta Federal Reserve President Raphael Bostic also reiterated his stance on rate cuts, calling for patience to see how businesses adjust to President Trump’s tariff policies.

Bostic said the job market is stable and inflation remains a risk, aligning with Powell’s assertion that uncertainty about the economic outlook has “diminished but remains elevated.”

He added that businesses could begin passing on the increased cost of inputs to consumers later this year, resulting from inflationary pressures caused by Trump’s tariffs.

However, Federal Reserve Governors Christopher Waller and Michelle Bowman took a contrary stance, citing labor market weakness as the primary reason for their expectation of a cut in July.

“If you’re starting to worry about the downside risk labor market move now don’t wait. Why do we want to wait until we actually see a crash before we start cutting rates?” Waller said.

Meanwhile, U.S. equity markets surged on Tuesday amid signs of Israel and Iran de-escalating tensions in their 12-day war, despite reports of violations.

At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up 0.97%, while the Invesco QQQ Trust (QQQ) gained 1.4%. Stocktwits data shows the retail sentiment around the S&P 500 ETF has been in the ‘extremely bearish’ territory over the past week.

For updates and corrections, email newsroom[at]stocktwits[dot]com.<

UK 10-year gilt yields fell below 4.53%, the lowest since May 7, as traders raised bets on rate cuts.

Hopes for easing Middle East tensions also reduced inflation concerns.

Fed Chair Powell said rate cuts could come sooner if inflation weakens or the labor market slows.

In the UK, BoE Gov Andrew Bailey and Deputy Gov Dave Ramsden confirmed that UK rates are on a downward path.

Bailey cited slower pay growth and slack in the economy, though he flagged issues with labor data.

He emphasized that domestic factors are more relevant than global risks.

Ramsden, who recently voted for a rate cut, said labor market weakness led to his decision, warning that inflation may fall below the 2% target.

He noted rising unemployment and fewer vacancies, especially in retail and hospitality, after April’s wage and tax hikes.

Still, BoE officials remain alert to second-round inflation effects.

Meanwhile, markets watched the fragile Iran-Israel truce, hoping it would ease global tensions.

Federal Reserve Chair Jerome Powell faced some heat from both sides of the political aisle regarding the committee’s decision against lowering interest rates. During the first of two days of congressional testimony, the chair said the current data supports rate cuts, but inflation forecasts give him pause.

President Donald Trump said he hoped Congress would work over “Too Late” Powell ahead of Powell’s testimony in front of the House Financial Services Committee on Tuesday, June 24. In a Truth Social post, he claimed cutting interest rates by several percentage points could save the U.S. $800 billion per year, presumably in interest payments related to the country’s climbing debt.

So far in fiscal year 2025, the U.S. has spent $776 billion in interest expense on the country’s $36 trillion in debt. In fiscal year 2024, the average interest rate paid was slightly higher than it is now, and the U.S. paid $1.13 trillion. Since 2010, the lowest interest expense paid by the U.S. was in 2012 at $360 billion, when the national debt was less than half what it is today.

Asked whether the “name-calling” impacted Powell, the chair answered, “You want to just stay focused on that task as long as you’re sitting in these chairs that we occupy – focus on that task. Do what you think is the right thing and take the consequences.”

Two Fed board members split with Powell

Turning up the heat on Powell were comments by two Federal Reserve Board members, Christopher Waller and Michelle Bowman. Both indicated during the week of June 15 that they could support a rate cut during the July meeting over concerns of the labor market weakening. In his testimony, Powell stayed noncommittal.

“If you just look in the rearview mirror and look at the existing data that we’ve seen, you can make a good argument” for multiple cuts, Powell said. The reason they haven’t yet cut is because forecasters “expect a meaningful increase in inflation over the course of this year.”

He later clarified the increase in those forecasts is due to tariffs. However, current data shows no impact of Trump’s tariff policy yet. Inflation has fallen slightly since the start of the year, while the federal unemployment rate has remained relatively unchanged over the past year.

The Fed’s preferred inflation measure, the core personal consumption expenditures price index, showed prices rose 2.5% on the year in April, slightly above the Fed’s 2% target. In May, the unemployment rate held steady at 4.2%.

“I would say this: I think if it turns out that inflation pressures do remain contained, then we will get to a place where we cut rates sooner rather than later,” Powell said. “I wouldn’t want to point to a particular meeting. I don’t think we need to be in any rush because the economy is still strong.”

The human impact of high interest rates

Lawmakers on both sides of the aisle brought up the personal price paid by Americans with higher interest rates, and especially its impact on housing and housing availability.

Rep. Rashida Tlaib, D-Mich., was one of the more forceful on the issue.

“We’re talking about a housing crisis that is getting worse right now because we’re not paying attention to future instability” caused by current rates, Tlaib told Powell. “I come from a community right now that I believe right now is being impacted by the current framework that you’re putting together, that I do feel like it’s going to [have] long-term effects on the housing crisis, and you’re ignoring it.”

Powell said the best thing for homeowners and everyone else is to fully restore price stability. As of June 18, the average 30-year fixed mortgage rate is 6.81%, up from 6.08% in September 2024 when the Fed made its first interest rate cut since 2020.