Key Details:
- President Trump’s rare visit to the Federal Reserve featured sharp criticism of a $3.1 billion renovation project and renewed pressure on Chair Jerome Powell to cut interest rates, according to CNBC’s coverage and video footage.
- While Trump softened past threats to fire Powell, he made it clear he expects action soon, saying, “I believe he’s going to do the right thing.”
- Meanwhile, Calculated Risk Blog’s FOMC Preview signals no policy change this week, with markets eyeing potential rate cuts in September and December.
We’re just days away from the next FOMC meeting (July 29-30). And until now, it seemed all but certain the Fed would once again pass up the opportunity to cut the federal funds rate. After all, the labor market is strong, and Powell can still point to upcoming tariff-induced inflation as the reason to hold off a bit longer.
But something happened last week that could change that. President Trump visited the Federal Reserve building (the one currently undergoing renovations) to talk to Fed Chair Jerome Powell.
The overarching theme can be summed up in one presidential quote:
“I just want to see one thing happen. Very simple. Interest rates have to come down.”
As the president stepped out of the Fed building, reporters asked a litany of questions, and more than one of those had to do with firing Jerome Powell. Trump’s answer:
“To do that is a big move, and I just don’t think it’s necessary… I believe that he’s going to do the right thing.”
Byron Lazine broke down President Trump’s quotes from his Fed visit, along with the FOMC preview in today’s Hot Sheet.
Read on for the highlights and what it could mean for this week’s FOMC meeting.
Trump Wants Rate Cuts. Now.
This part we know. Throughout the tour and press Q&A, Trump hammered a familiar theme: interest rates are too high, and the Fed is holding the housing market hostage.
As he said during the site visit.
“People are pretty much unable to buy housing, Because the interest rates are too high.”
Trump argued that the U.S., as the world’s strongest economy, should have the lowest interest rate globally.
“We should have the lowest interest rate of any country. And we don’t. Every point is worth $365 billion.”
He again linked high borrowing costs directly to stalled housing demand, especially among first-time buyers.
“Wonderful young people, young couples starting off, they can’t get a mortgage because the rates are too high.”
No Rate Cut in July? Trump Is Backing Off Powell (for Now)
While Trump has spent months publicly criticizing Powell, and even reportedly floated a draft termination letter, the visit marked a shift in tone.
When asked if he still wanted to fire Powell, the president answered in the negative, explaining:
“Because to do that is a big move, and I just don’t think it’s necessary. I believe that he’s going to do the right thing.”
When pressed on what he’ll do if Powell doesn’t cut rates at the July 29–30 meeting, Trump signaled restraint.
“I don’t think we’re going to do that. I don’t think so.”
What to Expect from This Week’s FOMC Meeting
While President Trump was busy turning up the pressure on Powell in person, the Federal Reserve is widely expected to keep rates unchanged at this week’s meeting.
According to the latest FOMC Preview from Calculated Risk Blog, July’s meeting is a placeholder, one that sets the stage for bigger moves later this year.
Here’s where things currently stand:
- The federal funds rate is expected to remain in its current range of 4.25% to 4.5%.
- Markets are pricing in two rate cuts before year-end:
- A 25 basis point cut in September
- A second cut in December
- The Fed will not release new economic projections or a dot plot this week, which means any policy shift is more likely to be signaled in August.
That signal may come during Powell’s keynote at the Jackson Hole Symposium on August 22. BofA notes that Powell used his Jackson Hole speech last year to hint at the September cut, and he could do the same this year, especially with inflation pressures and labor market risks still in play.
The Economic Backdrop: Mixed Signals, Slower Growth
Economic data released since the June meeting paints a mixed picture: inflation is creeping up, job growth is slowing, and GDP is struggling to regain momentum.
Let’s break it down:
#1: Growth is softening:
- Q1 2025 GDP showed a -0.5% contraction (annualized).
- Q2 estimates are closer to 2.5%, but that bounce reflects a reversal of Q1 distortions.
- Overall, the first half of 2025 is tracking at just 1.0% annualized growth, and the second half isn’t expected to be much stronger.
#2: Unemployment is inching up:
- June’s rate came in at 4.1%, with Fed projections showing a possible rise to 4.4% to 4.5% by year-end.
#3: Inflation isn’t done yet:
- Headline PCE inflation rose to 2.3% year-over-year in May, with an early estimate of 2.6% for June.
- Core PCE inflation (which excludes food and energy) rose to 2.7% in May, with further increases likely.
The Fed’s June projections reflect these concerns, with 2025 core inflation expected to range between 2.9% and 3.4%, well above the 2% target.
All of this supports the idea that the Fed is playing it safe in July, with eyes on more decisive action in the fall.
