Powell isn't taking a July rate cut off the table for Fed

Key Points

• Research suggests Jerome Powell has not ruled out a July 2025 rate cut, keeping options open based on data.

• It seems likely that market expectations lean toward holding rates steady, with a 19% to 25% chance of a cut in July.

• The evidence leans toward tariffs delaying rate cuts, with controversy over economic impacts and Fed's data-dependent approach.

Powell's Stance

Jerome Powell, the Federal Reserve Chairman, has indicated that a rate cut in July 2025 is not off the table. During a recent central banking conference, he stated, "I can’t say," when asked if July would be too soon for a rate cut, emphasizing that the decision depends on incoming economic data. He stressed a meeting-by-meeting approach, not ruling out any meeting for potential action.

Market Expectations

Market indicators, such as short-term interest-rate futures, show a one-in-four chance (25%) of a rate cut by the Fed's July 29-30 meeting, up from 20% earlier, according to Reuters. Investors estimate an 81% chance of holding rates steady, with a 19% chance of a quarter-point cut, as per CNN.

Economic Context

Powell noted that the Fed would have likely begun cutting rates by now if not for Trump's tariffs, which have introduced economic uncertainty and inflation pressures. The Fed has forecasted two quarter-point cuts for 2025, with a rate cut by September being virtually certain, based on market pricing.

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Survey Note: Detailed Analysis of Jerome Powell's Stance on a Potential July 2025 Rate Cut

This note provides a comprehensive analysis of Jerome Powell's position regarding the possibility of a rate cut by the Federal Reserve in July 2025, as of 12:13 PM PDT on July 1, 2025. The analysis is based on recent statements from Powell, market reactions, and economic context, ensuring a thorough understanding of the Fed's monetary policy outlook.

Background and Context

The Federal Reserve, under Chairman Jerome Powell, has been navigating a complex economic landscape in 2025, marked by persistent inflation, labor market dynamics, and recent policy changes, including President Trump's tariff announcements and the passage of the "One Big Beautiful Bill" tax legislation. The Fed's last meeting in June 2025 forecasted two quarter-point interest-rate cuts over the remainder of the year, carrying over a prediction from March. The upcoming July 29-30 meeting is a critical juncture, with market participants closely watching for signals on monetary policy easing.

Powell's Recent Statements

During a central banking conference in Sintra, Portugal, on July 1, 2025, Powell was asked if July would be too soon for markets to expect a rate cut. He responded, "I can’t say," indicating that the decision would depend on the economic data, as reported by Reuters. This statement aligns with his comments in other forums, where he emphasized a data-dependent approach. For instance, CNN quotes Powell saying, "he can’t say" if July would be too soon, but "wouldn’t take any meeting off the table or put it directly on the table." Similarly, CNBC reports Powell stating, "I really can't say," and that "it's going to depend on the data," reinforcing the Fed's flexible stance.

Powell's comments suggest that while a July rate cut is not the baseline expectation, it remains a possibility contingent on incoming economic indicators, such as inflation trends and labor market conditions. He also noted, as per NBC News, that the Fed would have likely begun cutting rates by now if not for the tariffs, highlighting external policy impacts on monetary decisions.

Market Reactions and Expectations

Market participants have adjusted their expectations following Powell's comments, with short-term interest-rate futures reflecting a one-in-four chance (25%) of a rate cut by the July 29-30 meeting, up from less than one-in-five (20%) earlier, according to Reuters. CNN reports investors estimating an 81% chance of the Fed holding rates steady, with a 19% chance of a quarter-point rate cut. CNBC notes that Fed funds futures traders are pricing in a more than 76% likelihood of holding rates steady, based on the CME FedWatch tool, indicating a slight variation in market pricing.

These probabilities suggest that while a July rate cut is not the most likely scenario, it is within the realm of possibility, prompting investors to slightly boost their bets on such a move, as per Reuters. The market's response underscores the uncertainty and the Fed's data-dependent approach, with X posts from financial analysts like @charliebilello on June 7, 2025, indicating market expectations of holding rates in June and July, with a cut anticipated in September .

Economic Context and Influencing Factors

The economic context is critical to understanding Powell's stance. The Fed's decision-making is influenced by recent developments, including Trump's tariff policies announced in April 2025, which have led to rising prices for China-made goods and potential delays in rate cuts, as noted by POLITICO. Powell's comments at the ECB Forum on Central Banking 2025, as reported in a YouTube video, suggest that tariffs have delayed lower rates, adding to economic uncertainty.

Inflation forecasts have risen materially, with the Federal Reserve likely delaying rate cuts due to tariff-related price increases, as per ABC News. The Fed's June forecast of two rate cuts for 2025, carrying over from March, indicates a cautious approach, with a rate cut by September being virtually certain, based on market pricing from Reuters.

Controversy and Broader Implications

The possibility of a July rate cut is controversial, with debates over its impact on inflation, economic growth, and market stability. Critics argue that cutting rates too soon could reignite inflation, while supporters see it as necessary to support a cooling labor market, as mentioned in an X post by @amitisinvesting on December 18, 2024, quoting Powell on downside risks to the labor market . The interplay between fiscal policy, such as the tax bill's deficit increase, and monetary policy adds complexity, with gold prices reaching record highs due to inflation fears, as reported by Yahoo Finance.

Summary Table of Key Impacts

Aspect	Details	Source
Powell's Stance	Not ruling out July cut, data-dependent approach	Reuters
Market Probability of Cut	19% to 25% chance, 76% to 81% chance of holding steady	CNN, CNBC
Tariff Impact	Delaying rate cuts, adding economic uncertainty	NBC News
Future Outlook	Two cuts forecasted for 2025, September cut certain	ABC News

This table summarizes the key factors influencing Powell's stance and market expectations, highlighting the data-driven approach and external economic pressures.

Conclusion

Jerome Powell's stance on a potential July 2025 rate cut reflects a data-dependent and flexible approach, with the possibility not ruled out but not the most likely scenario based on current market expectations. His comments, emphasizing the role of economic data and the impact of tariffs, underscore the Fed's cautious navigation of monetary policy amidst fiscal and economic uncertainties. The controversy surrounding the timing of rate cuts highlights the complex interplay between inflation, labor market conditions, and external policy impacts, necessitating close monitoring by market participants and policymakers.

Key Citations

• Fed rate cut bets rise after Powell doesn't rule out July

• Powell says the Fed would have cut rates this year if it weren't for tariffs

• Powell confirms that the Fed would have cut by now were it not for tariffs

• Fed Chair Powell says he won't rule out interest rate cut this month

• Powell isn't taking a July rate cut off the table for Fed

• Trump's tariffs kept Fed from cutting rates, Jerome Powell says

• Powell reiterates Fed will wait for more data before cutting rates

• Powell says Trump's tariffs have delayed rate cuts

• Fed could still cut rates in July, says Powell

• Market Expectations for Fed Funds Rate

• Federal Reserve Rate Cut Announcement

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