NEW YORK (Reuters) - Federal Reserve officials on Tuesday pushed back on market expectations and presidential pressure for the central bank to deliver a significant U.S. interest rate cut of half a percentage point as soon as its next meeting.
Chairman Jerome Powell defended the central bank’s independence from President Donald Trump and financial markets, both of which seem to be pushing for aggressive rate cuts, in remarks at the Council on Foreign Relations in New York.
“The Fed is insulated from short-term political pressures,” said Powell. Asked later about the possibility of disappointing markets by not delivering a cut, Powell added, “We’re not in the business, really, of trying to work through short-term movements in financial conditions. We have to look through that.”
But he said he and his colleagues are currently grappling with whether uncertainties around U.S. tariffs, Washington’s conflict with trading partners and tame inflation require a rate cut.
St. Louis Federal Reserve Bank President James Bullard on Tuesday said he does not think the U.S. economic situation is dire enough to warrant cutting rates by a half-percentage point at its next meeting in July, even though he pushed to lower rates last week.
“Just sitting here today, I think 50 basis points would be overdone,” Bullard said in an interview with Bloomberg Television. “I don’t think the situation really calls for that, but I would be willing to go 25 (basis points).”
At a meeting last Wednesday, the central bank left interest rates on hold but signaled reductions beginning as early as July.
Bullard dissented, arguing that weak inflation and uncertainties about the outlook for economic growth warranted a rate cut.
“You had a one-two punch,” with Powell warning against policy bending to short-term political pressures and Bullard
