Fed chair Powell reiterates no rush to cut rates

Federal Reserve Chairman Jerome Powell emphasized in his prepared remarks for his appearance before Congress that there is no urgency to begin lowering interest rates.

His comments echoed the cautious tone expressed in previous public statements, both from himself and other Federal Open Market Committee (FOMC) members, who have consistently underscored the importance of gaining greater clarity on the evolving economic landscape—particularly regarding the potential impact of new tariffs under consideration by the U.S. government.

Policymakers reiterated that it would be more prudent to wait for a fuller assessment of these developments before adjusting monetary policy.

As widely anticipated, the FOMC held the federal funds rate steady at a target range of 4.25%–4.50% during its June 2025 meeting, marking the fourth consecutive time rates were left unchanged. This decision reflects the Fed’s ongoing balancing act between managing inflation pressures and supporting economic growth amid increasing global and domestic uncertainties.

Alongside the policy announcement, the Fed released its updated Summary of Economic Projections (SEP), which reaffirmed the committee’s outlook for two rate cuts before the end of 2025. However, the longer-term path for interest rates appears more conservative, with only a single 25-basis-point reduction forecasted for both 2026 and 2027. This cautious trajectory signals that the Fed is likely to maintain a higher-for-longer stance unless inflation moderates more quickly than expected or economic growth shows sustained weakness.

In terms of the broader economic outlook, the Fed revised down its GDP growth projections, cutting its 2025 forecast to 1.4% from 1.7% previously, and reducing the 2026 estimate to 1.6% from 1.8%. The 2027 projection remained unchanged at 1.8%, suggesting the Fed expects a gradual return to trend growth over the longer term. These revisions reflect growing concerns about downside risks to the economy, including tighter credit conditions, trade policy uncertainty, and persistent inflationary pressures.