"Our job is not to cater to politics" Powell stressed that suppressing inflation is the Fed's primary goal

Even in the face of another attack from U.S. President Trump, Federal Reserve Chairman Jerome Powell emphasized at the congressional hearing on June 25 that suppressing inflation and maintaining price stability are the Fed's non-negotiable core tasks. He clearly stated that policy adjustments will be paused until the impact of tariffs on prices is fully understood, demonstrating a cautious and independent decision-making stance.

Economy Stable but Inflation Pressure Unabated, Fed Chooses to Hold Steady

Powell pointed out at the House Financial Services Committee hearing that the U.S. economy is growing strongly, the labor market is near full employment, and the overall situation is good. However, he also candidly admitted that the current inflation level is still above the 2% target, and the Fed will not rashly cut rates. He expects core inflation in May to rise to 2.6%, higher than April's 2.5%, further reinforcing the Fed's wait-and-see attitude.

Regarding the external concerns about tariff effects, Powell stated that such policy variables are still full of uncertainty, emphasizing that "its impact will depend on the final implementation of tariffs." Since tariffs may bring short-term price shocks, but historically most have not caused long-term inflation, the Fed will continue to assess their potential risks.

Linking Employment and Price Stability, Fed Adheres to Dual Mission

Powell reiterated the Fed's dual goals of promoting full employment and price stability, stating: "Without a stable price environment, we cannot achieve lasting labor market prosperity." He said the Federal Open Market Committee (FOMC) will work to maintain stable inflation expectations and prevent one-time price increases from evolving into long-term inflation issues.

Despite Trump again criticizing Powell as a "stubborn and stupid person" on the Truth Social platform and calling on Congress to "deal with him," Powell remained calm during the hearing. He said: "Political pressure does not affect our decisions. We are just doing our job."

Internal Divergence Emerges, Dot Plot Reveals Differing Attitudes

Although the Fed unanimously decided to hold steady last week, the policy outlook's "dot plot" reveals divergent opinions: of the 19 decision-makers, 9 expect to maintain or only cut rates once this year, while 10 expect two or more rate cuts. This anonymous forecast highlights the ongoing internal disagreement within the Fed about inflation trends and policy direction.

July Rate Cut? Market Not Convinced

Although two Fed governors, Michelle Bowman and Christopher Waller, recently stated that they support a July rate cut if inflation remains controlled, the market view is more conservative. According to the CME FedWatch tool, investors currently predict only a 23% probability of a rate cut at the July 29-30 meeting, with a higher probability of a September rate cut.

Powell's statement this time sends a clear signal: the Fed will not easily adjust policies before data is clear, nor will it deviate from its responsibilities due to political interference. As tariff effects have yet to emerge, the market needs to patiently wait for more inflation data, while the Fed continues to maintain its policy independence amid economic and political crossfire.