At the June Federal Open Market Committee (FOMC) policy meeting on Wednesday, Federal Reserve officials announced that interest rates would remain unchanged, ignoring President Donald Trump's repeated calls to lower borrowing costs. Hours before the US central bank wrapped up the highly anticipated powwow of monetary policymakers, Trump had (again!) some harsh words for Fed Chair Jerome Powell, calling him “stupid” and “too late,” quipping that maybe he should appoint himself to lead the Eccles Building. At 2 p.m. EST, the Fed announced the easing cycle remained on hold for the fourth consecutive meeting.
Jerome Powell Expresses Patience
The benchmark federal funds rate – a key interest rate that influences everything from consumer borrowing costs to the US government’s interest payments – was left unchanged at a range of 4.25% to 4.5%. The institution also released its updated Summary of Economic Projections, revealing that officials expect slowing growth, rising unemployment, higher inflation, and fewer rate cuts in 2026 and 2027. The good news, at least for the White House, is that the Fed is still penciling in two quarter-point rate reductions this year.
"Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated," the post-meeting FOMC statement said.
There was little reaction from Wall Street as traders overwhelmingly expected Powell and Co. to leave interest rates alone. They were too busy keeping an eye on a possible war in Iran. Looking ahead, according to data from the CME FedWatch Tool, the futures market is not forecasting any policy action until the September policy meeting. But if the economic activity is “solid,” the jobless rate “remains low,” and inflation is in a better position than where it was when the Fed initiated the rate-cutting cycle, what is everyone waiting for?
President Trump, market participants, and the business media would undoubtedly like to know.
Abandon Hope for Lower Rates
The June 18 post-meeting press conference, which is always an entertaining affair, presented the three faces of Jerome Powell: the optimist, the cautious, and the realist.
First, Powell highlighted the United States' economic performance following the coronavirus pandemic. “The US economy has defied all kinds of forecasts for it to weaken, really over the last three years, and it’s been remarkable to see again and again when people think it’s going to weaken out. Eventually it will, but we don’t see signs of that now,” he said.
Second, the central bank chief effectively dismissed the Summary of Economic Projections, also known as the "dot plot," telling reporters that it should be analyzed with a grain of salt. “I think what you see people doing is looking ahead at a time of very high uncertainty and writing down what they think the most likely case is," Powell averred. "No one holds these rate paths with a great deal of conviction, and everyone would agree that they’re all going to be data dependent."
Finally, he admitted that while recent inflation reports have been welcomed news over the last few months, the impact of tariffs on inflation is beginning to emerge. "It takes some time for tariffs to work their way through the chain of distribution to the end consumer," the Fed Chair explained.
Over the past several years, Jerome Powell has repeatedly emphasized to the public that the Federal Reserve is data-driven. In other words, it will craft monetary policy and take action based on the figures. When asked by Fox Business Network reporter Edward Lawrence about this, Powell momentarily stumbled before the wordsmith performed verbal acrobatics.
“Monetary policy has to be forward-looking. That is elementary. I always talk about the incoming data, the evolving outlook, and the balance of risks,” Powell said. However, years-old commentary from Powell and his colleagues has insisted that monetary policy is dependent on the statistics.
"At the Fed, we like to say that monetary policy is data-dependent. We say this to emphasize that policy is never on a preset course and will change as appropriate in response to incoming information," Powell said in an October 2019 speech. Or, how about this from economists at the Cleveland Fed: "Over the past ten years, the Federal Open Market Committee (FOMC) has repeatedly emphasized that future policy is data dependent." Fed Gov. Christopher Waller purported in January that lowering rates "just hinges on the data."
In September, when the Fed initiated the new policy cycle with a substantial 50-basis-point rate cut, the Fed's preferred inflation measures – the personal consumption expenditures (PCE) price index and core PCE – were at 2.1% and 2.7%, respectively. Supercore inflation, which excludes housing from core services, was at 4.3%. The unemployment rate was at 4.1%. Today, the PCE price index stands at 2.1%, the core PCE is at 2.5%, supercore inflation is at 4.2%, and the unemployment rate is 4.2%.
Why are the datasets so different between September 2024 and June 2025?
As Liberty Nation News has noted, Powell echoed the eminent economist Milton Friedman, stating that monetary policy operates with a long and variable lag. According to the Fed head in a July 2024 public appearance, if you wait for inflation to return to 2%, then you might have waited for too long. At the same time, when Powell followed through with three quarter-point rate cuts in 2019, citing slowing global economic growth and anemic trade flows amid Trump’s tariffs, inflation was also hovering around 2%.
President Trump recently made an interesting point, one that he ostensibly shared with Powell: Cut rates now, and inflation rises in the coming months, then start raising interest rates. This could be worth considering for policymakers in the world’s most powerful institution.
Moving the Goalposts
The Federal Reserve is seeking greater clarity on the impact of changes to immigration, trade, fiscal, and regulatory policies. This can be vague. Whatever the case, the Fed continually shifts its focus and adjusts the goalposts. Does the United States need lower rates? The numbers do not suggest so. However, did the economy need the 1% worth of cuts in a heated election season?
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