US Federal Reserve Chairman signals no rush to cut interest rates

Headquarters of the US Federal Reserve (Fed) in Washington DC (Photo: THX/TTXVN)

Speaking before the House Financial Services Committee, Mr. Powell stressed that the Fed has a responsibility to prevent a one-time price spike from becoming a “sustained inflation problem.”

He believes that currently, the Fed has enough basis to wait longer to better understand the actual developments of the economy before considering policy adjustments.

Mr Powell's statement came after two Fed officials, Christopher Waller and Michelle Bowman, recently suggested that a rate cut could come as early as July.

However, Mr Powell declined to comment on Mr Waller's views and said a rate cut could be considered if inflation was weaker than expected or the labor market deteriorated.

The Fed has kept its benchmark interest rate unchanged at 4.25-4.50% since its last cut in December last year.

Mr. Powell noted that the Fed will monitor June and July data to assess the impact of tariffs on consumer prices, adding that even if the impact is weaker than expected, this is still an important factor in policy making.

On the same day, just hours before the Fed Chairman participated in a congressional hearing, President Trump continued to call on the Fed to sharply lower interest rates, saying that the current interest rate should be "at least 2-3 percentage points lower" in the context of low inflation.

Responding to President Trump's Truth Social post criticizing him, Mr. Powell affirmed that he always did the right thing and accepted the consequences of that decision.

New York Fed President John Williams also supported maintaining current monetary policy, saying that many recent data reflect uncertainty about the economic outlook, but it is too early to assess actual data trends.

Mr. Powell said it is still unclear how new US trade policies will affect future consumption and investment.

However, he warned that tax increases this year could raise prices and stifle economic activity, but overall the economy is solid.

Regarding the possibility of a rate cut in July, he said he did not want to mention any specific meeting, but said there was no need to rush in the context of a strong economy.

He stressed that maintaining the credibility of controlling inflation is not easy to achieve, so the Fed will act very cautiously. Although inflation has decreased, it is still higher than the Fed's long-term target of 2%.

Since returning to the White House, President Trump has imposed 10% tariffs on nearly all trading partners and higher rates on imported steel, aluminum and autos.

Some experts warn that the tariffs could increase inflation and slow growth, although the actual impact so far has been modest - thanks to President Trump delaying some drastic measures and businesses stocking up to avoid price spikes.

While the Fed had expected to cut interest rates twice this year, there are now mixed views on whether it will do so in 2025.

However, Mr. Powell said a “substantial majority” of the Federal Open Market Committee (FOMC) still believes a rate cut later in the year is appropriate.

He also dismissed speculation about a weakening trend in the US dollar, calling it “hasty,” while affirming that the US dollar remains the top safe-haven currency.

Regarding tensions in the Middle East, Mr. Powell said that "it is too early to determine the possible economic impacts"./.

According to VNA

Source: https://baothanhhoa.vn/chu-tich-cuc-du-tru-lien-bang-my-ra-tin-hieu-chua-voi-cat-giam-lai-suat-253178.htm