Powell Sidesteps July Rate Cut Signals, Stresses Data Dependence

Fed Chair Jerome Powell declined to hint at potential July rate cuts during his June 25 congressional testimony, stating the central bank needs "more confidence" in inflation trends before easing policy.

Key Takeaways

• No pre-commitment: Powell avoided specifying timing, saying "we don't want to be premature"

• Political pressure mounts: GOP Rep. Lawler echoed Trump's criticism, questioning why rates stay high amid cooling inflation (core PCE at 2.6%)

• Data watchlist: June jobs (July 5) and CPI (July 11) to determine next moves

Market Reaction

📉 Rate cut odds fell to 28% for July (from 35%)

📈 2-year Treasury yield spiked 8bps to 4.74%

💵 DXY gained 0.5% as hawkish tones strengthened USD

The Big Picture: With the ECB cutting and BOJ potentially hiking, the Fed faces growing policy divergence pressures while balancing:

✓ Sticky services inflation

✓ Election-year political demands

✓ Fragile labor market indicators$BTC