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Tariffs

Fed Officials Divided on Interest Rate Cuts as Trump-Appointed Governors Call for July Action

Strategic Insights

— 1 min read

Fed officials, including governors Michelle Bowman and Christopher Waller, are taking opposing stances on interest rate cuts, sparking tension among the central bank's leadership. Bowman and Waller, both appointees of President Donald Trump, are advocating for a potential rate cut as soon as July, while Fed Chair Jerome Powell is cautioning against immediate action. The disagreement comes as the White House criticizes the Fed for not cutting rates, raising concerns about the central bank's independence.

Key Takeaways:

  • Michelle Bowman, a Trump-appointed Fed governor, is calling for a potential interest rate cut as soon as July, citing the impact of tariffs on inflation.
  • Christopher Waller, another Trump appointee to the Fed's board, also expressed support for a potential rate cut next month, pointing to rising unemployment among recent college graduates.
  • Fed Chair Jerome Powell is urging caution, emphasizing the need to closely monitor inflation before deciding whether to cut rates.
  • Despite criticism from the White House, the Fed is maintaining its independence, with seven of 19 officials supporting keeping rates unchanged for the rest of this year.
  • The comments from Bowman and Waller differ from Powell's, who last week stated the Fed would monitor the economy over the summer before deciding on rate cuts.
  • The Fed's decisions will have significant implications for the economy, including potential effects on mortgage rates, business loans, and unemployment.

Statistics:

  • The consumer price index rose 0.1% from April to May, the government reported last week.
  • Prices for many services, such as air fares and hotels, fell in May, offsetting any tariff impact.
  • Compared with a year ago, prices rose 2.4% in May, up from 2.3% in April.
  • The Trump administration has imposed a 10% duty on all imports, accompanied by an additional 30% levy on goods from China, 50% on steel and aluminum, and 25% on autos.
  • Unemployment among recent college graduates has been rising, with Waller pointing to this as a sign of possible weakening in the economy.

Sources:

  • "Fed officials divided as Trump-appointed governors call for July rate cut," AP, July 2025.
  • The Associated Press, "Fed Officials Divided on Interest Rate Cuts as Trump-Appointed Governors Call for July Action," July 2025.
  • CNBC, "Fed's Waller thinks a rate cut could be coming," July 2025.
  • The Associated Press, "Fed's Powell urges caution on interest rates as White House criticizes central bank," July 2025.

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