Just days after the Federal Reserve Open Market Committee (FOMC) concluded its June meeting and Fed Chair Jerome Powell held the federal funds rate at 4.25%-4.50%, Powell delivered his semiannual testimony Tuesday and Wednesday before the House Financial Services Committee and Senate Banking Committee, respectively.
“The Federal Reserve remains squarely focused on achieving our dual-mandate goals of maximum employment and stable prices for the benefit of the American people,” said Fed Chair Powell before the Senate Banking Committee. “Despite elevated uncertainty, the economy is in a solid position. The unemployment rate remains low, and the labor market is at or near maximum employment. Inflation has come down a great deal but has been running somewhat above our 2% longer-run objective. We are attentive to the risks to both sides of our dual mandate.”
Powell, after holding rates steady for the fourth consecutive meeting, has faced criticism from the Trump administration for not taking action to drop rates. Federal Housing Finance Agency (FHFA) Director William Pulte took to social media on several occasions over the past week to criticize Powell and call for his resignation.
“Do your job Jerome Powell, and lower rates. If not, resign and let someone else realize inflation is DOWN and that Americans deserve lower rates. ENOUGH IS ENOUGH,” said Pulte on the social media platform X.
The Trump Administration does not have direct control over the Federal Reserve’s policy decisions, but does have some influence. The President can nominate and appoint members of the Federal Reserve Board of Governors, including the Chair, which can influence the overall direction of the Fed, and can also voice their opinions about monetary policy.
President Trump voiced his opinion on Powell ahead of his appearance before Congress.
“’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,” said President Trump via Truth Social. “Europe has had 10 cuts, we have had ZERO. No inflation, great economy—We should be at least two to three points lower. Would save the USA 800 Billion Dollars Per Year, plus. What a difference this would make. If things later change to the negative, increase the Rate. I hope Congress really works this very dumb, hardheaded person, over. We will be paying for his incompetence for many years to come. THE BOARD SHOULD ACTIVATE. MAKE AMERICA GREAT AGAIN!”
According to news outlet TheHill, President Trump has threatened to fire Powell frequently throughout his two presidential terms, even though federal law prohibits him from doing so in all but extreme circumstances.
“Policy changes continue to evolve, and their effects on the economy remain uncertain,” stated Powell in his testimony. “The effects of tariffs will depend, among other things, on their ultimate level. Expectations of that level, and thus of the related economic effects, reached a peak in April and have since declined. Even so, increases in tariffs this year are likely to push up prices and weigh on economic activity.”
Rep. French Hill, Chair of the House Committee on Financial Services, noted during the hearing: “Four months into the Trump Administration, American workers and taxpayers are already benefitting from a strong, resilient economy. The Fed has noted that growth is solid, and even former Fed officials have dismissed the idea that a recession is near.”
Powell explained that “the economy remains solid, and following growth of 2.5% last year, gross domestic product (GDP) was reported to have edged down in the first quarter, reflecting swings in net exports that were driven by businesses bringing in imports ahead of potential tariffs. This unusual swing has complicated GDP measurement.”
Powell recently met with President Trump at the White House to discuss the state of the nation’s economy, employment, and inflation.
“Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace,” said the FOMC in a statement after the White House meeting. “The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation remains somewhat elevated.”
White House Press Secretary Karoline Leavitt confirmed the meeting between Trump and Powell, stating to members of the press after the meeting: “The President did say that he believes the Fed Chair is making a mistake by not lowering interest rates, which is putting us at an economic disadvantage to China and other countries. The President’s been very vocal about that, both publicly and now I can reveal privately as well.”
Powell commented that President Trump’s tariffs will come into play in dictating the future of the nation’s economy.
“The effects on inflation could be short lived—reflecting a one-time shift in the price level. It is also possible that the inflationary effects could instead be more persistent,” added Powell during his testimony. “Avoiding that outcome will depend on the size of the tariff effects, on how long it takes for them to pass through fully into prices, and, ultimately, on keeping longer-term inflation expectations well anchored.”
Despite being nearly 4,000 miles away from D.C. at a NATO meeting in the Netherlands, President Trump noted he is actively considering replacements for Powell, and that he is down to three or four candidates.
“I know within three or four people who I’m going to pick,” President Trump said Wednesday.
Trump continued his verbal attacks on the Federal Reserve Chair, adding that Powell’s term is up “pretty soon fortunately, because I think he’s terrible.”
