Federal Reserve officials offered differing takes this week on when the central bank might move to cut the benchmark federal funds rate from its current range of 4.25% to 4.5%.
Beth Hammack, the president and CEO of the Federal Reserve Bank of Cleveland who serves as an alternate member of the Federal Open Market Committee (FOMC) that sets U.S. monetary policy, said during a CNBC interview this week that she’s doubtful the Fed will make any interest rate changes at its May 7 meeting. She did, however, signal that a June rate move is a possibility.
“You’ve seen that this is not a Fed that is afraid of moving quickly if we need to move quickly,” Hammack said. “If we have clear and convincing data by June, then I think you’ll see the committee move if we know which way is the right way to move at that point in time,” Hammack said.
Federal Reserve Governor Christopher Waller, a current FOMC member, said during a Bloomberg Television interview on Thursday that he would support rate cuts if the Trump administration’s tariff policies result in a significant increase in unemployment.
But Waller said he doesn’t think the impacts of tariffs will result in “enough happening in the real data in the next couple of months until you get past July,” at which point the Fed may need to cut rates.
“I’m not going to overreact to any increase in inflation that I think is attributable to the tariffs, but if I see a significant drop in the labor market, then the employment side of the mandate, I think, is important that we step in,” Waller said. “I would expect more rate cuts and sooner once I start seeing some serious deterioration in the labor market.”
Federal Reserve Chairman Jerome Powell played his cards close to the vest and didn’t weigh in on the timing of potential rate cuts during an April 16 speech in Chicago. Since then, he was berated by President Donald Trump on social media on multiple occasions, including an April 17 post on Truth Social in which the president declared that “Powell’s termination cannot come fast enough!”
Trump backtracked on Tuesday, telling reporters that he has “no intention to fire” Powell. On Wednesday, though, Trump said he might call Powell to tell him to lower interest rates.
“I might call him,” Trump told reporters. “I haven’t called him, but I believe he’s making a mistake by not lowering interest rates.”
As of Friday afternoon, investors put the odds at 64% that the Fed will lower rates at its June 18 meeting, according to the CME FedWatch Tool, which tracks fed funds futures contracts. Investors are currently betting that the Fed will cut rates three or four times by the end of the year beginning in June, according to the CME Group data.
