Powell Doubles Down: ’No Decisions’ on September Rate Cut as Fed Holds Firm—Defying Trump Yet Again

Jerome Powell just threw cold water on rate-cut hopium—again. The Fed chair's latest 'hold steady' move keeps markets guessing while giving Trump another middle finger. Who needs monetary drama when you've got political theater?

No soft landing in sight. The Fed's 'wait-and-see' stance is textbook central banking—which means it'll either look genius or disastrous in hindsight. Place your bets.

Wall Street's crystal ball remains cloudy. With Powell refusing to pre-commit to September cuts, traders are back to parsing Fedspeak like medieval monks deciphering prophecies. Spoiler: The inflation dragon isn't slain yet.

Another day, another dollar—unless you're shorting the dollar. Then today's non-move might feel like financial waterboarding. Thanks for nothing, Jay.

Rising tensions

The decision to keep rates on hold will likely increase tensions with the White House, which is now also invoking a $2.5 billion renovation of the Fed's headquarters as a way to question the chair's management of the institution.

Trump played down his tensions with the Fed chair during a visit to the construction project last week, as he continued to distance himself from an effort to fire Powell. He said the Fed visit was about helping get the project finished, adding, "I don't want to be personal."

Later, Trump said of firing Powell: "To do that is a big move, and I just don't think it's necessary."

Asked last Thursday what might lead him to back off the barrage of critiques that Trump has been leveling against Powell for weeks, the president said, "I'd love him to lower interest rates," before patting Powell on the back.

Powell was asked about that construction tour at his press conference today. He said it was a "nice visit" and that it was an "honor" to host the president.

When asked if the focus on the construction project was actually about pressuring Powell to lower rates, the chairman noted it was "not for me to say."

The pressure is not expected to let up this fall. In the coming weeks, Powell will wrestle with calls for an "exhaustive internal review" of the Fed's operations and pressure from Republicans on Capitol Hill that could ramp up.

Rep. Anna Paulina Luna of Florida, a Trump ally, has formally requested that the DOJ investigate Powell for perjury over June comments about the renovations. That is seen as a long shot at best.

Perhaps more pressing is that House Speaker Mike Johnson said in an interview with Bloomberg last week that he is "disenchanted" with Powell and is even open to modifying the 1913 act that created the Fed.

That WOULD be a major change, but it is not expected to be before Congress in the near term. The House of Representatives is now on a recess that is scheduled to last for the rest of the summer.

Republican Sen. Tim Scott — who asked Powell about the Fed's renovations during a June 25 hearing — has also sent Powell a letter asking for more questions to be answered by Aug. 8. The senator said there were "distinct differences" between public plans about the renovation, Powell's testimony, and what the Fed has said on its website.

Treasury Secretary Bessent has additionally called for an "exhaustive internal review" of the Fed, saying it could be Powell's "legacy," as he accused the central bank of mission creep in its non-monetary policy activities.

Trump has signaled his support for the effort, and some observers say this could be the most consequential change if the idea gains steam and looks to reshape how the central bank operates.

At his press conference Wednesday, Powell was asked if he worried that Trump's ongoing pressure would weaken the Fed's independence.

"Having an independent central bank has been an institutional arrangement that has served the public well," he said. "As long as it serves the public well, it should continue and be respected."

He said it gives any country the ability to make "very challenging decisions" based on the data and not "political factors."

That, he added, is "widely understood, at least in Congress."

Powell also offered no new signs about whether he will step down from the Fed's Board of Governors when his term as chair is up next May. The White House prefers this outcome because it would allow it to fill another seat.

"I do not have any update for you," he said.