The appearance marked Mr. Powell’s first formal testimony since Mr. Trump intensified his calls for rapid and aggressive rate cuts. The president, who returned to the White House in January, has lambasted Mr. Powell in recent days, referring to him in a social media post as a “total and complete moron” and suggesting that the Fed is undermining economic growth by keeping interest rates too high.
Despite this rhetoric, Mr. Powell and a majority of Fed policymakers have maintained that the U.S. economy, while not without risks, does not currently warrant a rate reduction. The central bank’s benchmark interest rate has remained unchanged in the 4.25% to 4.5% range since late last year.
Mr. Powell’s testimony follows the Fed’s decision last week to leave interest rates unchanged for a fourth consecutive meeting. But divisions within the central bank are beginning to emerge.
Two Trump-appointed governors, Christopher J. Waller and Michelle W. Bowman, have signaled support for a rate cut as early as the July meeting. Both officials argue that the recent increase in tariffs may cause only a modest, short-term bump in inflation and should not deter monetary easing. Mr. Waller is widely seen as a contender to succeed Mr. Powell, whose term ends in 2026.
Other Fed officials, however, have urged greater caution. They warn that businesses facing higher input costs from tariffs may pass those on to consumers, potentially reigniting inflation at a time when the Fed is still working to anchor price expectations near its 2% target.