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A growing divide has emerged within the Federal Reserve over the timing and scale of potential rate cuts, largely due to uncertainties around President Trump’s tariffs. Fed Chair Jerome Powell has signaled he’s lowering the bar for cuts—suggesting that milder inflation or softening labor-market data could justify modest reductions by late summer.
The shift follows a pause in tariff escalations and a lack of immediate CPI jumps. Still, inflation’s stickiness remains a concern, as some officials warn that cost pass-through may take time to materialize. June meeting minutes reveal two distinct camps: a minority skeptical about any cuts this year, raising inflation fears, and a larger group leaning toward easing—provided upcoming data justifies it.
Notably, Trump-appointed governors Christopher Waller and Michelle Bowman advocate immediate reductions—even as early as July—while most others favor waiting until September to assess inflation and labor trends. Powell remains committed to a measured approach: any future cuts, he suggests, would be gradual and data-dependent to maintain balance.
Earnings season is underway, but this week’s inflation data may carry more weight—offering the clearest signal yet on which way Powell and the Fed may lean.
What Division Inside the Fed Means for Future Interest-Rate Cuts
by Nick Timiraos
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