At the latest Federal Open Market Committee (FOMC) meeting on June 18, the Federal Reserve board of governors once more chose to leave interest rates unchanged from the current 4.25 – 4.5 rate. Interest rates were last cut in December 2024.
At a press conference following the meeting, Federal Reserve Chair Jerome Powell stressed that the economy is on solid footing, between low inflation (though still not quite the Fed’s goal of 2%) and a strong labor market.
“Wage growth has continued to moderate while still outpacing inflation,” said Powell.
Danielle Hale, chief economist of Realtor.com®, echoed Powell’s claims in a press release responding to the FOMC. Since the May FOMC meeting, Hale noted that “the job market has continued to hold steady, with unemployment still hovering just above 4% and employers adding jobs. Some of the recession concerns such as worries about their personal financial situation and the likelihood of losing a job have faded, helping push home purchase sentiment higher.”
Hale added that, with interest rates unchanged, mortgage rates are likely to continue hovering above 6% as they have over the previous months.
While the economy remains stable, uncertainty about the future of the economy is greater than before due to tariffs. More Fed members predicted there would be no rate cuts this year than the last time the FOMC released economic projections, though a majority still expect two rate cuts by year end.
Following the FOMC announcement, Federal Housing Finance Agency (FHFA) Director Bill Pulte (appointed by Trump; the FHFA oversees Fannie Mae and Freddie Mac) noted his disagreement with the decision, sharing on X that “Jerome Powell needs to resign.”
“As Chairman of Fannie Mae and Freddie Mac, I can tell you that Jay Powell is hurting the housing market by being ‘Too Late’ to lower rates. He needs to resign, effective immediately,” Pulte wrote in a follow-up post.
Throughout the press conference, Powell claimed that the strong economy means the Federal Reserve is in a fortunate position of being able to leave monetary policy unchanged so as to wait and see for the impact of tariffs.
“For the time being, we are well-positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance,” said Powell, also saying that “the current stance of monetary policy leaves us well-positioned to respond in a timely way to economic development.”
President Donald Trump has consistently pushed Powell (who he first appointed as Fed Chair in 2018) to cut interest rates since taking office, though Powell has emphasized Fed independence while avoiding any direct public comment on the criticism. (Powell did meet privately in person with Trump last month.)
The effects of tariffs are projected to begin showing up in economic data this summer. Powell, citing one reason why the current economic data does not reflect the impact of tariffs, explained that “goods being sold at retailers today could have been imported several months ago before the tariffs.”
“The lack of inflation pressure doesn’t mean that we’re out of the woods when it comes to the impact of trade policy on U.S. prices, but it does give the Fed justification to continue to hold policy in its current stance,” said Hale.
In response to a question about whether Americans should “expect economic pain” in the latter half of 2025, Powell answered he was “not saying that at all.”
“The effects of tariffs will depend, among other things, on their ultimate level,” said Powell. “Expectations of that level and thus of related economic effects reached a peak in April and have since declined. Even so, increases in tariffs this year are likely to push up prices and weigh on economic activity.”
Asked if the slow housing market was a reason to cut rates, Powell pointed to the housing inventory shortage, a “longer run” issue.
“The best thing we can do for the housing market is to restore price stability and create a strong labor market,” Powell answered.
Ahead of the Fed’s announcement about not cutting rates, Trump was one of the many to predict this turn of events and castigated Powell for it:
“If he’s worried about inflation, that’s okay. I understand that,” he told reporters this morning. “I don’t think there’s going to be any. So far there hasn’t. But now we have a man that just refuses to lower the Fed rate, just refuses to do, and he’s not a smart person. I don’t even think he’s that political. I think he hates me, but that’s okay.”
When asked about the president’s comments toward him and if it affects his decision-making, Powell simply reaffirmed the Fed board members’ commitment to their dual mandate of low inflation and maximum employment. “That’s what matters.”
To view Powell’s full press conference, click here.
