Jerome Powell finally teases a rate cut, but don’t worry — he’s not about to let Trump claim it as his latest ‘win’

Federal Reserve Chair Jerome Powell recently spoke at the central bank’s annual conference, where he hinted that a change to interest rates might be coming soon. In his speech, Powell described two competing risks for the U.S. economy. Still, he seems to be giving in to Trump’s demands for a lower interest rate.

The first risk is that inflation could get worse, which would require the Fed to raise rates. The second risk is that the job market could weaken, which would mean the Fed should lower rates. He called the situation a challenge but indicated he is currently more worried about a possible economic downturn than about a long-term rise in inflation. He said, “downside risks to employment are rising. And if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment,” according to Politico.

Powell’s comments came at a time of major political pressure from President Trump, who has been very public in demanding lower borrowing costs. The President has used insulting names for the Fed chair. Even so, Powell was clear that any choice to cut rates would be made only on the Fed’s own analysis of economic data and what it means for the future. He stressed that the central bank would not change this data driven method. This was seen as a subtle answer to the political storm surrounding the Fed.

Trump is getting to Powell, slowly but surely

The discussion also included the economic effects of the President’s tariffs. While tariffs have made some Fed officials reluctant to lower borrowing costs because they can lead to price increases, Powell had a different view. He said, “Of course, ‘one-time’ does not mean ‘all at once. It will continue to take time for tariff increases to work their way through supply chains and distribution networks. Moreover, tariff rates continue to evolve, potentially prolonging the adjustment process.”

Powell noted that the full impact of tariffs takes time to be felt as the changes move through supply chains. Still, Trump has been harsh on Powell, despite warnings, calling him a “numbskull” and a “total and complete moron” for refusing to lower interest rates.

To help explain the Fed’s policy approach more clearly, Powell also announced updates to the central bank’s framework document. The changes are meant to provide a lasting, high-level explanation of how the Fed makes policy over the long term. The central bank’s next decision on interest rates is planned for the middle of September.