Jerome Powell’s Take on Rate Cut: Why It’s Still Uncertain

Markets are abuzz over a possible Fed rate cut in July. Governors Chris Waller and Michelle Bowman have raised their hands in support, signaling growing internal debate.

But Chair Jerome Powell remains cautious, preferring more data before making a decision. With inflation and trade policies at play, the question remains: will the Fed strike in July, or sit tight just a little longer?

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Key Takeaways

1. Some Fed officials support a July rate cut. Waller and Bowman believe inflation is steady and the job market needs help, so they’re open to cutting rates soon.

2. Jerome Powell prefers to wait for more data. Powell wants to see how inflation and tariffs play out before making any quick decisions.

3. A July cut is possible, but not likely. Markets give it a low chance for now, with most expecting a cut in September if trends hold.

Why Some Fed Officials Favor a July Rate Cut

Two Fed officials have recently hinted that a July cut could be on the table. Fed Governor Michelle Bowman said she’d back a move if inflation remains low, calling current economic data “solid” and emphasizing the need to support jobs.

Likewise, Governor Christopher Waller signaled a similar position, noting that rising joblessness and a steady labor market could justify early easing.

They both downplay the inflation risk from President Trump’s tariffs. Waller called any price increases “one-off” and not enough to derail a rate drop.

Bowman has also argued that rising employer costs aren’t forcing higher consumer prices. Their shared focus is on giving the job market and businesses breathing room.

Markets responded quickly. Treasury yields fell, and traders pushed odds of a July rate cut to around 22 percent. Stocks rallied as oil prices dropped, showing investors see lower rates as more influential than global risks.

This shift marks a change from earlier in the year when cuts were expected later in 2025. Now, at least some officials are hinting that easing may be sooner, if inflation stays under control.

Read more: Powell Sees Heightened Uncertainty in Today's Economy! Why His Speech Helps Clarify Sentiments for Traders

Why Jerome Powell is Still Taking a “Wait-and-See” Approach

Despite rising internal support, Fed Chair Jerome Powell remains cautious. After the Fed’s June meeting, Powell emphasized the need for more clarity on how tariffs might affect inflation and growth.

He’s waiting for key inflation data, including the Personal Consumption Expenditures index, expected just before the July 29-30 meeting.

That cautious tone is echoed by others in the Fed, including Richmond President Thomas Barkin, who highlights ongoing uncertainty from trade policies. Powell’s message is simple: don’t act on hopes alone, cutting rates prematurely risks worsening inflation or undermining their credibility.

Wall Street largely expects Powell to maintain this tone during congressional testimony this week. Analysts at Oxford Economics stress that “the bulk of the committee seems to be with Powell, who is in the wait-and-see camp”.

Read more: Is Powell Not Happy with Trump? Discussing the Tariff-Inflation Conundrum

What It Means for You and Your Money

So, what does all this Fed talk matter for your wallet and plans? First, the uncertainty means markets are likely to stay on edge. Yields and stock values may rise and fall quickly as officials talk and data roll in. If you hold a variable-rate investment, mortgage, or credit line, it could impact your costs.

Second, inflation data and tariffs remain crucial. Core PCE inflation is around 2.3 percent, above but close to the Fed’s two percent goal. If that stays steady or dips, Powell may feel more comfortable acting. But if tariffs feed inflation, he may hold firm.

Finally, a July cut isn’t certain yet. Market tools show only a one-in-five chance of a move next month. More likely, cuts may come later, perhaps in September or beyond, if Powell gets enough data to justify it.

Read more: Key Takeaways from Jerome Powell’s Recent Speech After the Interest Rate Announcement

Conclusion

The question of a July rate cut is still open. Fed insiders Bowman and Waller are pushing for action if inflation remains stable. But Powell is sticking to a cautious path, keen to see how tariffs and economic shifts actually play out. With Treasury yields in flux and political pressure growing, markets face more turbulence ahead.

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FAQ

Why would the Fed cut rates in July?

Governors like Bowman and Waller see stable inflation and signs of labor market cooling as enough reason to support a rate cut in July.

What is Jerome Powell waiting for?

Powell wants more clarity on tariffs and solid data, especially the PCE inflation report expected before the July 29-30 meeting.

How likely is a rate cut in July?

Markets see roughly a 20-23% chance of a 25 basis point cut in July, while most anticipate the first cut to happen in September.

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