With his “Big Beautiful Bill” advancing in the Senate, Trump renewed attacks on the Fed, vowing to fire Jerome Powell if reelected and install a dovish chair to slash rates. “We should be paying 1% right now,” Trump said, claiming the move would save over $600B annually.
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At his House testimony, Powell resisted political pressure, saying the Fed won't commit to a July cut and is watching June and July CPI closely. He hinted that tariff pass-through could be “less than we think,” signaling openness to easing if inflation stays muted.
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Powell also pushed back on broader critiques, defending the dollar’s global dominance despite April’s Treasury market stress and calling “decline of the dollar” fears premature. He warned federal borrowing is unsustainable—“no one knows where the tipping point is”—but distanced the Fed from political debates on tax, housing, and immigration, saying those are outside its control.
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Markets took the remarks as dovish: 2-year yields fell to 3.82%, and odds of a September cut rose to 70%. But with Trump calling Powell “a very stupid person,” monetary independence—and the trajectory of rates—remains in the political crosshairs.