Federal Reserve Chair Jerome Powell warned that if the Fed were to cut interest rates “too aggressively,” it could leave the job of reducing inflation unfinished, potentially forcing a reversal and subsequent rate hikes. Powell, speaking in Providence, Rhode Island, highlighted concerns about leaving rates too high for an extended period, which could “unnecessarily weaken” the labor market.
Last week, the Fed lowered interest rates by 25 basis points to a range of 4.00% to 4.25%, marking the first such move since December 2024.
The Federal Reserve has faced significant criticism from U.S. President Donald Trump, who has repeatedly called for interest rate cuts.
Last week, Stephen Miran, appointed by Trump to the Fed’s Board, argued that the Federal Reserve should rapidly cut its rate to a range of 2-2.5%.
Fed Governor Michelle Bowman, also appointed by Trump, emphasized the need for the central bank to reduce interest rates quickly, citing signs of decreasing inflation but a wavering labor market.
Meanwhile, Austan Goolsbee, Governor of the Federal Reserve of Chicago, stated in a CNBC interview that the Fed should proceed cautiously, noting that inflation still exceeds the 2% target.
