Powell resists Trump pressure: Fed prioritizes data 'before considering any adjustments' in rates

U.S. Federal Reserve (Fed) Chairman Jerome Powell appeared before the House Financial Services Committee on Tuesday, where he addressed pressure from President Donald Trump to cut interest rates.

In his speech, Powell emphasized that the Fed should not rush to change interest rates and that it will "wait" before considering any adjustments in the policy stance approach.

In that regard, Powell responded to Trump's recent comments, who called him "dumb" and demanded a rate cut of at least two to three percentage points.

The Republican president argued that lower rates would benefit the U.S. economy, which he said faces high costs from interest payments on the national debt.

However, Powell insisted that the Fed prioritizes economic stability and containing inflation, especially in the face of uncertainty generated by the Trump administration's tariff policies.

During his biannual testimony, Powell noted that the Fed is "well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance."

He further explained that Trump's tariffs create uncertainty, as their ultimate level will determine their impact on prices and economic activity.

“Expectations of that level, and thus of the related economic effects, reached a peak in April and have since declined," Powell said. However, he acknowledged that a further tariff increase could put upward pressure on prices.

The labor market

Powell also highlighted the labor market's strength, describing it as “broadly in balance and consistent with maximum employment.”

However, he clarified that a significant weakening in employment could warrant interest rate adjustments.

Trump vs Powell

Powell's cautious stance contrasts with Trump's statements. The president has intensified his criticism of the institution's chairman, calling him "dumb" and "hardheaded person" in social media posts.

Trump has argued that other central banks have already cut rates and that the Fed is lagging, affecting U.S. competitiveness.

Despite these pressures, Powell stressed that political factors do not guide the Fed's decisions but economic data and that the central bank is committed to stabilizing inflation and the labor market.