The Big Story 

Federal Reserve Chair Jerome Powell is in no hurry to lower interest rates despite months of pressure from President Trump, he told lawmakers Tuesday.

© Greg Nash

Testifying before the House Financial Services Committee on Tuesday, Powell stood by recent statements that the Fed will react to changes in the data as they come in, as opposed to following a predetermined path on monetary policy.

During testimony, Powell acknowledged that there was some disagreement about the path of rate reduction among members of the rate-setting committee.

“There’s a significant minority that doesn’t agree, but a significant majority feels that it will be appropriate to reduce rates later this year,” Powell said.

The Fed’s most recent dot plot for 2025 interest rates, which shows the spread of different views among central bankers, shows that there are nine members of the committee who think that rates for this year should be between 4 and 4.5 percent while 10 members think they should be between 3.5 and 4 percent.

The federal funds rate was projected earlier this month to reach 3.9 percent this year — the same projection as in March — which would require two standard rate cuts of 0.25 percentage points.

“‘Too Late’ Jerome Powell, of the Fed, will be in Congress today in order to explain, among other things, why he is refusing to lower the rate. Europe has had 10 cuts, we have had zero,” Trump wrote on social media Tuesday. 

So far, tariffs from Trump’s trade war have not made a significant impact on inflation. But Powell said Tuesday he expects inflation to increase over the summer.

The Hill’s Tobias Burns has more here. 

Welcome to The Hill’s Business & Economy newsletter, I’m Aris Folley — covering the intersection of Wall Street and Pennsylvania Avenue.

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Essential Reads 

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Tax Watch 

House GOP moderates tell leadership they won’t back Senate tax bill over Medicaid cuts

More than a dozen House Republicans warned they won’t support the Senate’s version of the tax and spending bill because the proposed Medicaid cuts are too steep. 

Led by Rep. David Valadao (R-Calif.), 15 other vulnerable Republicans sent a letter to Senate Majority Leader John Thune (R-S.D.) and House Speaker Mike Johnson (R-La.) saying they support the Medicaid reforms in the House version of the legislation, but the Senate Finance Committee proposal went too far. 

“Protecting Medicaid is essential for the vulnerable constituents we were elected to represent. Therefore, we cannot support a final bill that threatens access to coverage or jeopardizes the stability of our hospitals and providers,” the lawmakers wrote. “The House’s approach reflects a more pragmatic and compassionate standard, and we urge that it be retained in the final bill.”  

The Senate Finance Committee draft seeks to clamp down on two tactics states use to boost Medicaid funding to hospitals: state-directed payments and Medicaid provider taxes. The restrictions are a major concern for rural hospitals, a key constituency for senators.  

Republicans have set an ambitious July 4 deadline to pass the bill and send it to President Trump to be signed into law.  

The Hill’s Alexander Bolton has more here.

Tax Watch is a regular feature focused on the fight over tax reform and extending the 2017 Trump tax cuts this year. Email a tip

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