⚠️⚠️⚠️⚠️Tonight's volatility may occur after Powell's "verbal battle" on Capitol Hill at 10 PM
Powell is expected to cautiously adhere to the message he conveyed last week, when he stated that the Fed is "in a good position to wait and learn more about where the economy might be headed" before considering any interest rate changes.
"We want to get more data, and at the same time we can do this because the economy is still in a strong state," Powell told reporters last week. "Ultimately, the costs of tariffs have to be paid, and part of that will fall on the end consumer."
So far, the tariffs imposed by the Trump administration have not led to the price increases and rising unemployment that policymakers warned about. In fact, economists expect this week’s data to show that the Fed's preferred core inflation measure rose only 0.1% in May, marking the third consecutive month of such a modest increase, which would be the mildest inflation growth over three months since 2020.
Two Fed governors, Waller and Bowman, have both indicated that the impact of tariffs on prices may be temporary, and they may support a rate cut in July.