Fed watcher from the Wall Street Journal, Nick Timiraos is tweeting that Fed Chair Powell dodged a questions on a July cut, but his comments offered little to suggest there is any effort to set the stage for a July cut.
The chair was consistent with recent comments. Last week he did testify that July is open only because all meeting are open, but he also expected inflation numbers to pick up in June, July and August. WIth inflation above target, and unemployment not on low but not racing higher, the Fed Chairs arms are tide.
A summary of the panel discussion from Timiraos:
Fed Policy Stance
Powell maintained a wait-and-see approach, citing a solid U.S. economy as justification for caution before resuming rate cuts.
The Fed would likely have continued cutting rates this year if not for tariff-related uncertainty.
Powell emphasized the Fed is data-dependent and will make decisions meeting by meeting, without ruling out or committing to any timeline.
The central bank is especially watching for signs of inflation or unexpected labor market weakness.
Some Fed officials support a July rate cut, viewing the impact of tariffs as likely temporary.
Others are concerned that Trump’s tariff hikes could reawaken inflationary pressures, due to businesses being more comfortable raising prices post-2021-22 inflation.
Powell rejected political pressure and defended the Fed’s independence amid criticism from Trump and his advisers.
Economic Outlook
Powell described the U.S. economy as “solid”, with inflation having moderated compared to prior years.
Consumer spending is slowing, particularly in discretionary categories like travel.
Underlying inflation, excluding food and energy, stood at 2.7% in May, above the Fed’s 2% target but stable.
There’s concern that tariffs may hurt business profits and economic activity, potentially raising unemployment more than prices.
Powell suggested milder inflation and soft employment data could justify cuts even without a sharp economic downturn.
