Federal Reserve Chairman Jerome Powell is set to address Congress twice this week, providing clarity on the Fed’s decision to maintain interest rates steady until September. This stance persists despite ongoing pressure from President Trump, who has publicly urged for significant rate cuts to stimulate economic growth. Powell’s testimonies before the House Financial Services Committee and the Senate Banking Committee will be closely monitored by market participants and policymakers alike.
Following the Fed’s recent decision to hold the federal funds rate at a target range of 4.25% to 4.5%, concerns about geopolitical tensions and their impact on global markets have intensified. The U.S. military action against Iran has heightened fears of rising oil prices, which could pose inflationary risks. However, the Fed remains cautious, emphasizing a data-driven approach to monetary policy adjustments amid these uncertainties.
While some Federal Reserve officials, including Bullard and Bowman, have indicated potential support for a rate cut in July due to the transient effects of tariffs on inflation, Powell is expected to maintain a prudent outlook. His focus remains on assessing economic indicators before implementing any changes, underscoring the Fed’s commitment to balanced and measured policy decisions.