Federal Reserve Chair Jerome Powell said the U.S. economy remains strong, and the central bank is in a good position to wait before making any changes to interest rates. He noted that while inflation is slightly above the Fed’s 2% target and there is still economic uncertainty, the labor market remains solid and close to full employment.
Powell said the Fed is carefully watching risks to both inflation and employment. He also warned that rising tariffs could increase inflation and slow economic activity. He stressed that the Fed’s job is to ensure that temporary price increases don’t lead to long-term inflation by keeping expectations under control.
According to Powell, the Fed will continue balancing its goals of price stability and maximum employment. He added that without stable prices, the U.S. cannot achieve a strong labor market for the long term.
Meanwhile, President Donald Trump criticized Powell for not cutting interest rates. On social media, Trump noted that Europe has already made multiple rate cuts while the U.S. has done none. He argued that with low inflation and a strong economy, the Fed should reduce rates by at least two to three percentage points.
Federal Reserve Governor Michelle Bowman also signaled she is open to rate cuts. She said that if inflation continues to ease, she would consider a rate cut as early as the July meeting. Bowman noted that the labor market is showing early signs of weakness and trade policy is unlikely to drive inflation much higher.
U.S. short-term interest rate futures dipped slightly, as traders now see a lower chance of an early rate cut by the Fed.
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