Democrats join some Republicans, Trump in calls for Fed to lower rates
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Federal Reserve chair Jerome Powell testifies during a House Financial Services Committee hearing on Capitol Hill in Washington, D.C. on Tuesday. Photo: Saul Loeb/AFP via Getty Images
Federal Reserve chair Jerome Powell told lawmakers on Tuesday that he is in "wait-and-see" mode on interest rates, as Republicans and Democrats alike called for the Fed to make cuts soon.
Why it matters: It adds to the pressure Powell faces in Washington to slash borrowing costs — from some congressional leaders on both sides of the aisle, President Trump and even internally at the Fed.
- The difference, of course, is that Trump is calling for drastic cuts to help lower the government's interest payments — a view not expressed at Tuesday's hearing.
- Democrats, meanwhile, stressed what they said was the importance of the Fed shutting out Trump's criticisms in its policy decisions, something Powell said the central bank takes seriously.
What they're saying: "From our side, we'd love to see the rates go down," Rep. Juan Vargas (D-Calif.) said on Tuesday at a hearing hosted by the House Financial Services Committee.
- "I know a number of my colleagues on the other side would love to see the rates go down. I think it's pretty unanimous," Vargas added.
Between the lines: Powell emphasized that the central bank is waiting to see the economic fallout from Trump's trade policy.
- The Fed has held rates steady since December, citing uncertainty about whether tariffs would ultimately be a bigger threat to inflation or the labor market.
- He said said that some members of Congress say privately that the Fed is "doing the right thing."
State of play: Powell testified days after two top Fed officials — who were appointed by Trump, as was Powell — said they supported rate cuts, possibly as soon as July.
- The remarks, by Fed governors Christopher Waller and Michelle Bowman, were a sharp break from the usual unison of the Board of Governors.
How it works: Democrats typically support lower rates and worry about labor market strains, while Republicans typically favor tighter money.
- On Tuesday Powell was asked by multiple lawmakers, including Republicans, whether he would support a July rate cut.
- "As long as the economy's strong, we can take a little bit of a pause," Powell said.
The intrigue: Before the hearing, Trump blasted out on his social media site that Powell should cut rates, adding: "I hope Congress really works this very dumb, hardheaded person, over."
The bottom line: At the hearing, Powell said looking at the backward data alone, "you would say that we would have continued cutting."
- "The difference, of course, is at this time, all forecasters are expecting pretty soon, that some significant inflation will show up from tariffs," Powell said.
