Federal Reserve Chair Jerome Powell testimony: Live coverage

ByKyle Campbell, Claire Williams, John Heltman

June 24, 2025 9:55 AM

Fed Chairman Jerome Powell — Federal Reserve Chair Jerome Powell.

WASHINGTON — Federal Reserve Chair Jerome Powell told Congress the central bank remains firmly in wait-and-see mode for adjusting monetary policy.

In prepared testimony in front of the House Financial Services Committee on Tuesday, Powell said lingering uncertainty about the impacts of higher tariffs is keeping the Fed's monetary policy in a holding pattern, even as inflation readings continue to move toward 2%.

"The effects on inflation could be short lived — reflecting a one-time shift in the price level. It is also possible that the inflationary effects could instead be more persistent," Powell said. "Avoiding that outcome will depend on the size of the tariff effects, on how long it takes for them to pass through fully into prices, and, ultimately, on keeping longer-term inflation expectations well anchored."

Powell's comments come on the first of two days of Capitol Hill testimony this week, part of the Fed chair's biannual monetary policy report to Congress.

The full report, released last week, largely summarized the major economic and financial developments of the year to date. It also reviewed the Fed's policy actions, which have largely consisted of holding the target interest rate range between 4.25% and 4.5%, and slowing the pace of its balance sheet runoff.

Powell's appearance also comes as President Donald Trump and others in his political orbit have continued to criticize the Fed for keeping interest rates unchanged even as inflation continues to trend down. Advocates for easier policy say higher rates are depressing economic activity and increasing the government's debt financing costs unnecessarily.

Minimum capital requirements

Fed's Bowman makes case for leverage ratio reform

June 23, 2025 1:18 PM

In a 1:32 am post to Truth Social on Tuesday, Trump said the federal funds rate should be "at least two to three points lower" than where it is today, adding that such a lower rate would save the country roughly $800 billion per year, presumably referring to government interest payments on existing debt.

"What a difference this would make. If things later change to the negative, increase the Rate [sic]," Trump wrote. "I hope Congress really works this very dumb, hardheaded person, [sic] over. We will be paying for his incompetence for many years to come."

But, in his remarks, Powell said restrictive trade policies will, eventually, lead to higher prices and it is the Fed's duty to ensure that a jump in prices does not lead to persistent inflation.

"The FOMC's obligation is to keep longer-term inflation expectations well anchored and to prevent a one-time increase in the price level from becoming an ongoing inflation problem," Powell said. "As we act to meet that obligation, we will balance our maximum-employment and price-stability mandates, keeping in mind that, without price stability, we cannot achieve the long periods of strong labor market conditions that benefit all Americans."

9 Posts

4h 56m ago

Powell: leverage ratio revision will make SLR a 'backstop'

By John Heltman

Federal Reserve Chair Jerome Powell.

Bloomberg News

Federal Reserve Chair Jerome Powell said that the central bank's nascent efforts to revise its supplemental leverage ratio bank capital rule is aimed at making the ratio a "backstop" rather than a binding capital constraint and improving the function of the Treasury bond market.

In responding to a question from Rep. Andy Barr, R-Ky., about the Fed's nascent efforts to revise the SLR and broader capital regime, Powell said that the purpose of the revisions is to avoid penalizing banks for participating in low-risk, low-return activities like trading Treasury bonds.

"When banks are bound by the leverage ratio, when that's the binding capital constraint, then that's going to make low-risk, low-return assets something you don't want to hold," Powell said. "So lots of fairly low risk intermediation, including Treasury market intermediation, gets taxed to the point with capital requirements that you just see less of it."

Powell added that he views the leverage ratio as a backstop against excessive risk taking rather than a binding constraint for banks.

"I've always thought that it would be better if we had a leverage ratio that … was a backstop rather than the binding thing, and that's what this proposal is going to do," Powell said.

5h 55m ago

Powell: staff pay cut measure would make retention 'harder'

By John Heltman

Bloomberg News

Federal Reserve Chair Jerome Powell said that an item included in the initial draft of the tax and spending bill that would restrict Federal Reserve bank supervisor pay would have had a negative effect on the central bank if it were allowed to pass.

Speaking during his semiannual testimony before the House Financial Services Committee Tuesday, Powell said that the provision — which Rep. Brad Sherman, D-Calif., characterized as restricting Fed supervisory staff pay to 70% of the pay rate at other bank regulators — would have hurt the central bank's ability to attract or retain top talent and would also infringe on the Fed's ability to manage its own personnel issues.

"It would have made it … harder for us to attract or to retain personnel," Powell said. "It also would have knocked down something we've had for 90 years, which is a sort of a moat that allows us to take care of HR issues on our own, without Congress."

6h 11m ago

Powell talks up Bowman's supervision chops

By Kyle Campbell

Federal Reserve Chair Jerome Powell.

Bloomberg News

Fed Chair Jerome Powell said the central bank's new top supervisor is distinctly suited for the job.

During his testimony to the House Financial Services Committee Tuesday, Powell said that Vice Chair Michelle Bowman's experience as the top banking supervisor in Kansas sets her apart from the two other officials who have held her position.

"Vice Chair Bowman is someone who is actually deeply knowledgeable and experienced in supervision, and that hasn't really been the model — we've had people who are experts on regulation," he said. "I think she brings a particular ability to move supervision in a healthy direction while also preserving safety and soundness."

Powell pointed to the elimination of reputational risk from exam materials and an overall effort to make bank supervision more hands-off as cornerstones of the Fed's new approach to supervision.

Powell added that he expects Bowman will be able to both implement these top-line supervisory priorities and then ensure they are conveyed to on-the-ground examiners in an effective way.

"As a former bank examiner, Vice Chair Bowman is actually very well positioned to engage with supervisors and in a way that someone with experience can do successfully, whereas if you're if you don't have that experience, I think it might be harder," he said.

Powell also heralded Bowman's "background and understanding" as key attributes in overhauling the Fed's supervisory culture.

6h 43m ago

Powell: leverage ratio proposal won't exempt Treasuries

By Kyle Campbell

The U.S. Treasury building in Washington, D.C.

Bloomberg News

The Federal Reserve is not seeking to exempt U.S. Treasury securities from the calculation of the minimum capital requirement for large banks.

Fed Chair Jerome Powell said the central bank's proposed change to the supplementary leverage ratio — which is set to be rolled out at an open meeting tomorrow — will allow banks to exclude their Treasury holdings from the calculation of the capital requirement.

But Powell noted that it is still possible that a Treasury exemption is included in an ultimate rule change.

"In terms of the structure of the thing, I think we're seeking comment on a particular proposal that doesn't involve exclusion, but we're also asking a question about exclusion," he said.

Many in and around the banking sector had hoped the Fed would implement a full exemption of Treasuries from the leverage ratio as it had done on a temporary basis in 2020 to help stabilize the market during the pandemic. Powell's confirmation that it will not be a primary part of the proposal indicates that the Fed will pursue a different approach that lowers the overall capital implications of the SLR.

During the hearing, Powell said he has long supported changes to the SLR, noting that the risk-blind capital requirement can have negative consequences when it becomes the primary requirement for which banks must manage.

"When the leverage ratio is binding, it discourages banks from undertaking low margin, fairly safe activities, such as mediation in the Treasury markets," Powell said, though he could not guarantee that a change in the SLR will guarantee a greater willingness for banks to serve as market makers for U.S. debt. "This should encourage more mediation. I don't have a numerical estimate of how much that would matter, but I do think it would matter."

Powell on Trump criticism: 'We live with the consequences'

Bloomberg News

Fed Chair Jerome Powell, in response to a question from Rep. Josh Gottheimer, D-N.J., on President Donald Trump's pressure on Powell to slash interest rates, said that he will "live with the consequences" of any pushback he receives from the President.

"We're focused on one thing, that is we want to deliver a good economy for the benefit of Americans and for the health of the American people," Powell said. "That's it. Anything else is kind of a distraction."

While Trump said ahead of the hearing that he hopes Congress "really works this very dumb, hardheaded person," Republican lawmakers' comments toward Powell have been more tepid. A few lawmakers, including House Financial Services Committee Chairman French Hill, R-Ark., and the full committee's vice chair Rep. Bill Huizenga, R-Mich., asked why Powell is commenting on the inflationary impact of tariffs, but the overall tone of the hearing has so far been mild.

In response to a question by Rep. Maxine Waters, D-Calif., Powell said that his priority is that he and the Fed "do our jobs." He said that he thinks he is "fully protected" under the law, a question of some contention after the Trump administration's actions to fire, for example, the heads of independent agencies such as the National Credit Union Administration.

"I think that I have a job that I'm sworn to do," Powell said. "That's what we think about, what's the right thing."

Powell wary of 'direction of travel' with economic data

Federal Reserve Board Chair Jerome Powell addresses the Senate Banking Committee

Federal Reserve Chair Jerome Powell.

Bloomberg News

Federal Reserve Chair Jerome Powell said he is not worried about the quality and quantity of government-collected economic data at present, but is concerned about the trajectory of those indicators under the Trump administration.

Responding to a question from Rep. Sam Liccardo, D-Calif., Powell said he is not concerned that economic indicators published by the Federal Government — such as inflation metrics published by the Bureau of Economic Analysis or labor participation rates published by the Bureau of Labor Statistics — are unreliable or hurting the central bank's ability to manage interest rates. But Powell said he does fear that he is concerned that the quality of that data could decline further, which he said would hinder not only the Fed but all businesses and policymakers who rely on that data to make informed decisions.

"I wouldn't say I'm concerned about the data today, although clearly there has been a very mild degradation of the scope of the surveys and things like that — but I would say the direction of travel is something I'm concerned about," Powell said. "Measuring the U.S. economy carefully and well is a project that's been going on and we've been getting better at it for 100 years or more. It's really important, not just for the Fed, but for Congress — and for businesses, frankly — to know what really is going on in the economy. What's happening? Is growth high, is it low? All of those sorts of things."

Powell added that public economic data are critical pieces of information that markets and policymakers rely upon to make sound judgements, and he is concerned about reports that the administration is looking to make cuts at agencies compiling and issuing that data.

"I think it's just a smart investment to just continually try to get better at measurement of what's happening in the economy, and I don't like to see the kinds of stories I'm reading, and the idea that data is going to be more volatile and less reliable."

Republicans push Powell on why he's talking about tariffs

Rep. Bill Huizenga, R-Mich.

Bloomberg News

In an emerging line of questioning for leading Republicans on the House Financial Services Committee, Rep. Bill Huizenga, R-Mich., asked Fed Chair Jerome Powell about why he is commenting on President Donald Trump's tariff policy, but did not, in Huizenga's view, talk with equal candor about government spending under President Joe Biden.

"So are tariffs in your lane, but a huge fiscal spending by the Biden administration not in your lane?" Huizenga asked.

Powell said that he and other Fed members are not commenting on tariff policy, but rather on the inflationary effects of tariffs that are important to how the Fed looks ahead and decides interest rates.

"We are not commenting on tariffs," Powell said. "What our job is, is inflation — keeping inflation under control"

Powell added that the economic impact of Trump's tariff policy — whatever it ultimately may be — are likely inflationary.

"All professional forecasters I know on the outside do expect a meaningful increase in inflation over the course of this year," he said.

Powell insists tariffs are likely inflationary

Federal Reserve Chair Jerome Powell.

Bloomberg News

Fed Chairman Jerome Powell told the House Financial Services Committee that President Donald Trump's tariffs are likely to spur inflation higher, despite pushback from the panel's Chairman French Hill, R-Ark., who asked whether the president's tariff strategy could have different outcomes.

"The effects of tariffs will depend, among other things, on their ultimate level," Powell said. "Expectations of that level, and thus of the related economic effects, reached a peak in April and have since declined. Even so, increases in tariffs this year are likely to push up prices and weigh on economic activity."

Powell's views on tariffs have the potential to pose a political problem for Trump and Republicans, who partially campaigned on perceptions of high inflation. The Fed, if inflation remains high, is unlikely to cut its benchmark interest rate, which would have a further inflationary effect.

Hill asked Powell to comment on remarks by Fed Gov. Christopher Waller, who said last week that he doesn't expect tariffs to raise inflation significantly Powell declined to comment on Waller's remarks, but said that he thinks "many paths are possible here.

"We could see inflation come in not as strong as we expect," depending on the labor market, Powell said.

Rift opening at the Fed on interest rates

Federal Reserve Vice Chair for Supervision Michelle Bowman has said she would favor cutting interest rates later this year.

Bloomberg News

The Fed's decision to hold interest rates steady last week received unanimous support from the Federal Open Market Committee, but some Federal Reserve policymakers appear to be edging toward supporting a cut in the near term. Fed Gov. Christopher Waller and Vice Chair for Supervision Michelle Bowman — the two governors besides Fed chair Jerome Powell that were nominated by Trump in his first term — have both indicated that easing policy could soon be appropriate.

"As inflation has declined or come in below expectations over the past few months, we should recognize that inflation appears to be on a sustained path toward 2% and that there will likely be only minimal impacts on overall core PCE inflation from changes to trade policy," Bowman said in a Monday speech. "We should also recognize that downside risks to our employment mandate could soon become more salient, given recent softness in spending and signs of fragility in the labor market."

Powell said in his prepared testimony that the Fed's current policy is restrictive enough to prevent a sudden surge in inflation but, in his estimation, not prohibitive to economic activity. He said it also puts the Fed in a good position to adjust policy once the impacts of higher tariffs begin reflecting in economic data.

"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 said.

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twitter	JohnHeltman
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