Federal Reserve chair sends strong message on July interest rate cut | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Don’t hold your breath, but…

Federal Reserve Chair Jerome Powell on July 1 told a global audience of world bankers, economists, and academics what could prompt a long-awaited U.S. interest rate cut later this month.

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Speaking on a panel with four other central bank leaders at the Sintra Conference in Portugal, Powell outlined the requirements that are needed for the Federal Open Meeting Committee to cut the Federal Funds Rate at its next meeting on July 29-30.

As the last rate cut was in December 2024, the politically independent Fed has been under mounting pressure from President Donald Trump to slash rates to put “TRILLIONS” of dollars back into the hands of consumers, businesses, and investors.

The Fed has been under pressure from President Trump to slash the Federal Funds Rate.

Image source&colon; Gunes/Anadolu via Getty Images

Here’s why interest rates have been on hold

Powell has defended the FOMC’s universal decision to hold the Federal Funds Rate steady at 4.25% – 4.50% in June, despite describing the U.S. economy as “stable.”

The reason: expected inflation bubbling up prices this summer from President Trump’s tariffs, which are external sales taxes on imported goods and services.

The U.S. tariff rates are currently the highest the nation has seen in nine decades.

The funds rate is tied to the cost of borrowing money, impacting all aspects of the American economy. Interest rates on mortgages, credit cards, auto loans, and a host of other loans and investment vehicles are straining wallets and portfolios.

The FOMC’s “wait-and-see” approach to the funds rate was in keeping, Powell said, with the Fed’s dual mandate of prudent monetary policy.

This requires the central bank to regulate the U.S. money supply by keeping inflation in check and the unemployment rate stable.

Some Fed and market analysts were forecasting the next probable rate cut of .25% could come at the September FOMC meeting.

Then Fed Governors Christopher Waller and Michelle Bowman, both Trump appointees, separately said late last month that a funds rate cut could come as early as the July meeting, providing tariff inflation proved to be transitory and the jobs numbers didn’t weaken.

Other economists, including Powell during testimony last week on Capitol Hill, and Fed officials were not as aggressive.

Morgan Stanley Chief U.S. Economist Michael T. Gapen said in a note to analysts that he did not expect to see a rate cut at all this year.

Powell’s latest comments on a July interest rate cut

The Sintra Conference is formally known as the ECB Forum on Central Banking. It is the European Central Bank’s flagship annual meeting held each summer in Sintra, Portugal. This year’s theme: “Adapting to Change: Macroeconomic Shifts and Policy Responses.”

Powell noted that a “solid majority of central banks later this year” will begin to reduce interest rates later this year.

As for a July cut in the United States, Powell responded “I really can’t say.” He added that the Fed will be “carefully watching the labor market” over the remaining four 2025 meetings.

The Bureau of Labor Statistics releases its June jobs report on Thursday, July 3.

So how does Powell expect to look back on 2025?

“It’s clearly an important year,’’ Powell said, drawing laughter from the audience and fellow panelists. “There’s a lot going on…with trade, and I think I’m hopeful that we’ll look back on it as a [successful] year.”

The panel moderator, Bloomberg anchor Francine Lacqua, then addressed the elephant in the room: “You get attacked by the president a lot on a personal basis. Does it make your job harder?”

–More Federal Reserve:

“I’m very focused on just doing my job,” Powell responded. “I mean, there are things that matter…using our tools to achieve the goals that Congress has given us, maximum employment, price stability, financial stability, and…that’s what we focus on 100%,” .

European Central Bank President Christine Lagarde supported Powell’s nonpolitical independence. “I think I speak for myself, but I speak for all colleagues on the panel. I think we would do exactly the same thing as our colleague Jay Powell does,” she said.

On June 30, President Trump sent Powell a hand-written note demanding a 1% rate cut. This came the same day Treasury Secretary Scott Bessent stoked the flames around the topic of Powell’s successor, with himself as a potential candidate.

Powell’s term as chair is up in May 2026, and his separate term as a member of the Fed’s Board of Governors expires in January 2028.

Despite the president making aggressive demands for months, Powell has said he won’t resign as chair.