Key Facts
• On July 1, Fed Chair Jerome Powell spoke at a central bank forum in Sintra, Portugal.
• Powell stated that without Trump’s significant policy changes, the Fed would have cut rates this year.
• The Fed has not reduced interest rates at all in 2025.
• Trump’s tariffs are seen as impacting the U.S. economy, delaying rate cuts.
• Trump criticized Powell, calling him “incompetent” and “foolish” for not lowering rates.
• On June 30, Trump posted a handwritten note on social media, blaming Powell for “massive losses” to the U.S.
• Market predictions for the late July Fed meeting: 81% chance of no rate change, 19% chance of a 0.25-point cut.
• Powell noted most Fed officials expect a rate cut later in 2025, depending on inflation and labor market trends.
• European Central Bank President Christine Lagarde praised Powell’s data-driven, non-political approach.
• Powell avoided commenting on Trump’s criticism, focusing on his duties instead.
Summary
Federal Reserve Chair Jerome Powell revealed that the Fed would have likely cut interest rates in 2025 if not for the economic impact of tariffs imposed by former President Donald Trump. Speaking at a central bank forum in Portugal, Powell highlighted the cautious stance of Fed officials, who are monitoring inflation and labor market trends before making decisions. Trump has repeatedly criticized Powell for not lowering rates, accusing him of causing economic harm. Despite this, Powell remains focused on his responsibilities, avoiding direct responses to Trump’s remarks. Market analysts predict a low likelihood of rate cuts in July, with most expecting no change. European Central Bank President Christine Lagarde commended Powell’s non-political, data-driven leadership.
