Testifying before the House Financial Services Committee on Tuesday, Powell stood by recent statements that the Fed will react to changes in the data as they come in, as opposed to following a predetermined path on monetary policy.
During testimony, Powell acknowledged that there was some disagreement about the path of rate reduction among members of the rate-setting committee.
“There’s a significant minority that doesn’t agree, but a significant majority feels that it will be appropriate to reduce rates later this year,” Powell said.
The Fed’s most recent dot plot for 2025 interest rates, which shows the spread of different views among central bankers, shows that there are nine members of the committee who think that rates for this year should be between 4 and 4.5 percent while 10 members think they should be between 3.5 and 4 percent.
The federal funds rate was projected earlier this month to reach 3.9 percent this year — the same projection as in March — which would require two standard rate cuts of 0.25 percentage points.
“‘Too Late’ Jerome Powell, of the Fed, will be in Congress today in order to explain, among other things, why he is refusing to lower the rate. Europe has had 10 cuts, we have had zero,” Trump wrote on social media Tuesday.
So far, tariffs from Trump’s trade war have not made a significant impact on inflation. But Powell said Tuesday he expects inflation to increase over the summer.
The Hill’s Tobias Burns has more here.
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