Federal Reserve Chair Jerome Powell signaled that the central bank is in no rush to lower interest rates further during his semiannual monetary policy report to Congress on Tuesday. Powell faced questions about tariffs, China’s trade practices, and the dismantling of the Consumer Financial Protection Bureau (CFPB) during his appearance before the Senate Banking Committee. “With our policy stance now significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance,” Powell said.
He described the economy as “strong overall” with inflation that is easing but still present. Powell’s stance aligns with other Fed officials and Wall Street expectations that interest rates will be maintained at the Fed’s March meeting. The dismantling of the CFPB, an agency funded through the Fed to maintain independence from the political process, was a key topic during the hearing.
Democrats highlighted the CFPB’s role in enforcing consumer protection laws and returning over $21 billion to consumers.
Powell emphasizes economic strength, stability
Republicans argued that the agency has not been held accountable since its inception.
Powell affirmed his support for open trade when asked about his 2018 testimony, while acknowledging difficulties with countries that do not “play by the rules.”
The Trump administration has recently rolled out policies that could impact consumer prices, the labor market, and economic growth, including tariffs and regulatory cuts. The Fed has adopted a holding pattern after slashing its key interest rate a full percentage point last year, as the US economy expanded, unemployment fell, and consumer spending remains healthy. Powell emphasized that the broader banking system is safe, despite questions regarding the administration of consumer compliance outside of the CFPB.
He noted that the current policy stance, with the benchmark fed funds rate in a range between 4.25%-4.5%, allows for flexibility. Powell explained that while mortgage rates have remained high, this is more closely related to long-term bond rates rather than the Fed’s shorter-term rate decisions. He suggested that mortgage rates could come down as long-term bond yields decrease, though he did not specify a timeline for when this might occur.
Powell’s additional testimony before the House Financial Services Committee is scheduled for Wednesday.
