Author: Li Dan, Wall Street Insight
The Federal Reserve recently decided to pause rate cuts again, and Fed Chairman Powell reiterated that the Fed is not eager to act and does not believe preemptive rate cuts are necessary to address tariff impacts, once again contradicting President Trump's repeated calls for immediate rate cuts. On Wednesday, May 7th Eastern Time, the Fed's monetary policy statement added a new line: "The risks of rising unemployment and inflation have increased." During the post-meeting press conference, Powell was asked which issue he needs to address first during his tenure - unemployment or inflation. Powell stated that the risks of rising unemployment and inflation have intensified. It is currently unclear which risk is more concerning. "It is too early to draw conclusions." Powell believes that both unemployment and inflation risks need to be monitored simultaneously, and a choice might have to be made between them. When asked if the Fed would need a long time to understand the situation's development, Powell emphasized: "I believe we do not know." He reiterated that the Fed is not in a hurry to cut rates, saying: "We do not think we need to rush to adjust rates." "We believe we can be patient and will focus on the data." Powell also emphasized that Trump's high tariffs could potentially drive up unemployment and inflation. He said: "If the recently announced significant tariff increases continue, it could lead to rising inflation, slowing economic growth, and increased unemployment rates." [The rest of the translation follows the same approach, maintaining the original structure and fully translating the text while preserving any HTML tags.]Not Influenced by Trump's Calls and Not Requesting a Meeting with the President
Powell said that Trump's calls for rate cuts "will not affect our work at all". He said: "We will always do the same thing, which is to use our tools to promote maximum employment and price stability, benefiting the American people. We will always only consider economic data, prospects, and risk balance, and nothing else. That is all we need to consider."
When a reporter asked Powell about Trump's previous statement that he would not remove him as Fed Chair, Powell responded that he had nothing to say.
Another reporter asked whether Powell could still serve as a Fed board member after his term as Fed Chair ends in May 2026. Powell also said he had no comment on this.
When asked why he had not met with Trump during his new presidential term, Powell replied: "I have never requested a meeting with any president, and I never will."
Government Debt Growth Path Is Unsustainable
A reporter asked if spending cuts by the Trump administration could impact economic growth. Powell stated that the Fed views congressional budget actions as "a given". Congress does not need advice from the Fed on fiscal policy, just as the Fed does not need advice from Congress on monetary policy.
However, Powell reiterated his warning about an unsustainable fiscal path. He said:
"One thing we clearly know is that the current government debt growth trajectory is not sustainable. The debt itself is not at an unsustainable level, but the growth path is unsustainable."
