A growing divide between President Donald Trump and Federal Reserve Chair Jerome Powell took center stage Tuesday as Powell defended the central bank\u2019s cautious stance on interest rates before the Republican-led House Financial Services Committee.<\/p>\n\n\n\n
Trump, who has repeatedly demanded immediate rate cuts, intensified his public criticism overnight, declaring on social media that there is \u201cno inflation\u201d and the economy is doing \u201cgreat.\u201d He urged Powell to act now, saying rates could always be raised later if inflation returns.<\/p>\n\n\n\n
But Powell pushed back during his testimony, arguing that the Fed must remain vigilant as underlying inflation risks persist. He cited elevated oil prices, new tariffs, and immigration restrictions as pressures that could push both inflation and unemployment higher<\/strong> \u2014 a scenario known as stagflation<\/strong>.<\/p>\n\n\n\n Recent figures show inflation has eased from pandemic-era highs, but it remains above the Fed\u2019s 2% target<\/strong>. Powell noted that policymakers expect the Fed\u2019s preferred inflation measure to rise from 2.5% to 2.6%<\/strong> in May.<\/p>\n\n\n\n At the same time, the unemployment rate is creeping up<\/strong>, a worrying signal that may suggest the economy is weakening under the weight of higher borrowing costs and global uncertainty.<\/p>\n\n\n\n William Pulte, director of the Federal Housing Finance Agency and a vocal Fed critic, accused Powell of politicizing the central bank. In a post on X, Pulte wrote, \u201cPowell\u2019s policies hurt real people \u2026 just trying to pay their car loans, credit cards, and mortgages.\u201d<\/strong><\/p>\n\n\n\n Powell acknowledged that higher rates are painful for many Americans but said the Fed has no choice but to wait for clearer signs before moving. \u201cAll professional forecasters expect inflation to accelerate later this year,\u201d<\/strong> Powell told Rep. Bill Huizenga (R-MI), citing the unpredictable impacts of tariffs and immigration policies.<\/p>\n\n\n\n Economists are increasingly warning of stagflation \u2014 a toxic mix of stagnant growth and rising prices. \u201cHigher oil prices, higher tariffs, and restrictions on immigration are putting downward pressure on GDP and upward pressure on inflation,\u201d<\/strong> said Torsten Slok of Apollo Global Management.<\/p>\n\n\n\n Slok added, \u201cLower GDP growth and higher inflation is the definition of stagflation.\u201d<\/strong> That prospect puts the Fed in a difficult spot, balancing the risk of over-tightening with the danger of inflation reaccelerating.<\/p>\n\n\n\n Despite Trump\u2019s demands and the pressure from within his administration, Powell stood firm on the Fed\u2019s independence and emphasized the need for a data-driven approach. But the political heat is rising ahead of November\u2019s election \u2014 and with inflation still stubborn and jobs beginning to fade, the Fed may soon be forced to act.<\/p>\n","protected":false},"excerpt":{"rendered":" Fed holds firm as inflation lingers and unemployment rises A growing divide between President Donald Trump and Federal Reserve Chair Jerome Powell took center stage Tuesday as Powell defended the central bank\u2019s cautious stance on interest rates before the Republican-led House Financial Services Committee. Trump, who has repeatedly demanded immediate rate cuts, intensified his public<\/p>\n","protected":false},"author":5,"featured_media":6698,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[46],"tags":[4203,4208,4206,4197,4209,4198,4207,4201,4202,4205,4200,4199],"class_list":{"0":"post-6697","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-fed-interest-rates","9":"tag-federal-reserve-rate-policy","10":"tag-fhfa-william-pulte","11":"tag-jerome-powell-testimony","12":"tag-oil-prices-inflation","13":"tag-powell-house-hearing","14":"tag-stagflation-risks","15":"tag-tariffs-inflation-effect","16":"tag-trump-vs-powell","17":"tag-u-s-gdp-slowdown","18":"tag-u-s-inflation-2025","19":"tag-unemployment-rising"},"_links":{"self":[{"href":"https:\/\/guardianglobe.org\/index.php?rest_route=\/wp\/v2\/posts\/6697"}],"collection":[{"href":"https:\/\/guardianglobe.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/guardianglobe.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/guardianglobe.org\/index.php?rest_route=\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/guardianglobe.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6697"}],"version-history":[{"count":1,"href":"https:\/\/guardianglobe.org\/index.php?rest_route=\/wp\/v2\/posts\/6697\/revisions"}],"predecessor-version":[{"id":6699,"href":"https:\/\/guardianglobe.org\/index.php?rest_route=\/wp\/v2\/posts\/6697\/revisions\/6699"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/guardianglobe.org\/index.php?rest_route=\/wp\/v2\/media\/6698"}],"wp:attachment":[{"href":"https:\/\/guardianglobe.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6697"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/guardianglobe.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6697"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/guardianglobe.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6697"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Data shows mixed signals, but Fed remains cautious<\/h2>\n\n\n\n
Fed faces political pressure and global economic risks<\/h2>\n\n\n\n
Outlook uncertain as political and economic tension rise<\/h2>\n\n\n\n