JD Vance blasts Fed Chair Jerome Powell for avoiding rate cuts, ‘love to hear an argument…’

United States Vice President JD Vance has put Federal Reserve Chairman Jerome Powell on blast for saying that the central bank is in “no rush” to lower interest rates. In a post on social media platform X (Twitter), Vance accused Powell of cutting rates before the 2024 US elections, but not “now with inflation lower”.

“I’d love to hear an argument for why Powell cut rates 50 points right before an election but can’t do it now with inflation lower,” Vance wrote.

What did Jerome Powell say?

Speaking to lawmakers in a congressional panel on June 24, Jerome Powell said the US Fed is not in a hurry to cut interest rates, as they are looking for more clarity on how US President Donald Trump’s tariffs are affecting the economy, according to a Bloomberg report.

"The effects of tariffs will depend, among other things, on their ultimate level. For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance,” Powell told the House Financial Services Committee.

On questions over a possible rate cut in July, Powell added, “If it turns out that inflation pressures do remain contained, then we will get to a place where we cut rates, sooner rather than later. But I wouldn’t want to point to a particular meeting. I don’t think we need to be in any rush because the economy is still strong.”

He also stressed that uncertainty in the economic outlook meant a wide set of outcomes remained possible, stating: “Should inflation come in weaker than expected or the labor market deteriorate, the Fed could cut rates sooner. Equally, higher-than-expected inflation could push the Fed to keep holding. Many paths are possible here.”

Rate cut coming by September?

Powell's statements came after the US Fed kept interest rates unchanged in a range of 4.25-4.5 per cent last week. Fed officials have indicated that two rate cuts might come by 2025-end, and a Bloomberg economists' survey expects a cut by September.

Analysts at Evercore ISI told clients in a note, “His testimony continues to point to September as the next decision point and, on our read, is consistent with a September cut as a reasonable central case, but very far from guaranteed.” 

The US Fed has been at loggerheads with Donald Trump over interest rates, as the US President consistently pushes for lower rates, alleging that the Fed's reluctance to cut rates has increased borrowing costs for the US government. 

(With inputs from Bloomberg)