During a speech at the Central Banking Forum organized by the European Central Bank in Sintra, Portugal, Federal Reserve Chairman Jerome Powell shared recent thoughts on the state of the US economy, inflation, and potential changes in interest rates.
State of the Economy and Inflation
Jerome Powell noted that the US economy is in solid shape and inflation is moving toward the 2 percent target. According to him, excluding the impact of tariffs, inflation is decreasing satisfactorily. Powell indicated that the pause in interest rate cuts was necessary to assess the impact of tariffs on the economy.
Signals for July Interest Rate Cuts
Powell stated that the majority of the Fed members expect a rate cut later this year, but the timing of such a decision is still unclear. "I can't say whether July is too early to cut rates. It will depend on the data," said the Fed Chairman.
Conflict Between Trump and Powell
Jerome Powell also responded to the question of whether he would lower rates if tariffs did not exist. His answer displeased Donald Trump: "If it weren't for Trump's tariffs, we would have lowered interest rates by now." This viewpoint contrasts with Trump's positions, who calls for more aggressive rate cuts, insisting that the economy needs stimulation.
Although Jerome Powell did not provide a clear date for interest rate cuts, his comments on the favorable state of the economy and the need for a cautious approach to changes spark interest and discussions in the financial community.
