Jerome Powell Live: Fed Chair testifies about monetary policy before House Financial Services Committee

Federal Reserve (Fed) Chairman Jerome Powell testifies about the Semi-Annual Monetary Policy Report before the House Financial Services Committee.

Powell testimony key takeaways

"US not in recession."

"Many paths are possible."

"Could see inflation come in not as strong as expected."

"If that's the case that would suggest cutting sooner."

"Also, weakening labor market would suggest cutting sooner."

"If inflation, labor market remain strong, could cut later."

"We don't bless individual forecasts as a Committee."

"Fed projections are for inflation to move up because of tariffs."

"What will happen with rates will depend on economy."

"Significant majority of policymakers feels will be appropriate to reduce rates later this year."

"Projections are subject to great uncertainty."

"Story has been evolving, our thinking has been adapting."

"Too early to know economic implications of Middle East."

"We are not facing a tension between mandates."

"Reason we are not cutting rates is that forecasts in and out of Fed expect meaningful increase in inflation this year."

"In housing, there's a longer-run shortage that Fed cannot affect."

"Absolute best thing we can do for housing is to restore price stability."

"We expect tariff inflation to show up more, but don't know how much to be passed to consumers."

"We are at higher levels of rates, significantly more room to cut than there was when rates were near zero."

"We don't consider politics in making rate decisions."

"If not for forecast of inflation, we would have continued cutting."

"It's a question of being prudent and careful."

"We don't see weakness in labor market."

"If we saw labor market weakness we would change things."

"As long as economy is strong, we can take a little bit of a pause here."

"Too soon to say anything on supply chains, watching that."

This section below was published at 12:49 GMT to cover Fed Chairman Jerome Powell written testimony.

According to testimony prepared for delivery at a hearing before the House Financial Services Committee on Tuesday, Federal Reserve (Fed) Chairman Jerome Powell will reiterate that increased tariffs are likely to push up inflation and weigh on economic activity.

Key takeaways from Fed Chairman Powell's testimony

"Well-positioned for the time being to wait to learn more about the likely course of the economy before adjusting policy."

"The Economy is solid despite elevated uncertainty."

"Near full employment, inflation somewhat above 2% target."

"Attentive to risks on both sides of Fed's mandate."

"Strong labor market has helped narrow demographic disparities in earnings, employment."

"Fed's obligation is to prevent one-time increase in price-level from becoming an ongoing inflation problem by keeping inflation expectations well-anchored."

"To meet that obligation, will balance employment and price stability mandates."

"Without price stability, cannot achieve long periods of strong labor market conditions."

Market reaction to Fed Chairman Powell's testimony

The US Dollar (USD) Index stays in the lower half of its daily range near 98.00, losing about 0.3% on the day.

This section below was published as a preview of Fed Chairman Powell's testimony at 10:00 GMT.

• Jerome Powell’s testimony in the US Congress will be a top-tier market-moving event this week.
• New clues on the Federal Reserve interest rate path are awaited.
• US Dollar, stock markets and other asset classes could see big swings with the Fed Chair’s words.

Jerome Powell, Chairman of the United States (US) Federal Reserve (Fed), will deliver the Semi-Annual Monetary Policy Report and testify before the US House Financial Services Committee on Tuesday. The hearing will start at 14:00 GMT and it will have the full attention of all financial market players.

Jerome Powell is expected to address the main takeaways of the Fed’s Semi-Annual Federal Reserve Monetary Policy Report, published last Friday. In that report, the Fed noted that there are some early signs suggesting that tariffs are pushing up inflation and reiterated that monetary policy is well-positioned for what lies ahead.

In a long Q&A session, House members are expected to ask Powell about the interest rate path, inflation developments, and the economic outlook. They are also very likely to inquire about how US President Donald Trump’s policies and the current geopolitical environment could influence prices, growth prospects and the monetary policy moving forward.

The CME FedWatch Tool shows that markets are currently pricing in about a 20% probability that the Fed will lower the policy rate by 25 basis points (bps) in July after maintaining its status quo at every meeting this year. The revised Summary of Economic Projections (SEP), published alongside the policy statement after the June meeting, showed that policymakers are still projecting two 25 basis points (bps) rate cuts in 2025 and a single rate cut in 2026, compared to two rate cuts marked down in March’s SEP.

In an interview with CNBC this past Friday, Fed Governor Christopher Waller said that the Fed is in a position to lower rates as early as July. Citing concerning signs in the labor market, such as a high unemployment rate among recent graduates and slower job creation, Waller argued that the Fed should not wait for the job market to crash before easing policy. Similarly, Fed Governor Michelle Bowman noted that she would be in favour of lowering the interest rate at the next meeting to align the policy more closely with its neutral setting and maintain a healthy labour market.

In case Powell notes that they will not have enough data to confirm a rate cut in July and reiterates that they need to remain patient, the market positioning suggests that the US Dollar (USD) could gather strength against its rivals in the immediate reaction. On the flip side, a significant USD selloff could be seen if Powell leaves the door open for a policy-easing step in July. Comments on the inflation outlook, especially with rising energy prices due to the escalating geopolitical tensions in the Middle East, could also drive the USD’s valuation.

About Jerome Powell (via Federalreserve.gov)

"Jerome H. Powell first took office as Chair of the Board of Governors of the Federal Reserve System on February 5, 2018, for a four-year term. He was reappointed to the office and sworn in for a second four-year term on May 23, 2022. Mr. Powell also serves as Chairman of the Federal Open Market Committee, the System's principal monetary policymaking body. Mr. Powell has served as a member of the Board of Governors since taking office on May 25, 2012, to fill an unexpired term. He was reappointed to the Board and sworn in on June 16, 2014, for a term ending January 31, 2028."