US President Donald Trump struck an optimistic tone after a rare in-person visit to Federal Reserve headquarters in Washington on Thursday, suggesting the central bank may be edging closer to lowering interest rates.
The visit, which included a tour of the Fed’s costly renovation project, something Trump didn’t hesitate to criticize, also gave him a chance to speak directly with Fed Chair Jerome Powell.
Following their meeting, Trump called the conversation “very productive” and hinted that Powell may be warming to the idea of cutting rates.
“He stated quite emphatically, ‘the country is doing well,’” Trump told reporters, interpreting the remark as a potential sign that more accommodative policy could be on the horizon.
In a notable shift from his earlier rhetoric, Trump praised Powell, referring to him as a “very good man,” a far cry from past jabs, when he once labeled the Fed Chair a “numbskull” over his reluctance to slash interest rates.
The meeting comes as Trump continues to press the Fed for action, especially in light of stubbornly high borrowing costs that have weighed heavily on housing affordability and consumer demand.
No easy path forward
Even with President Trump pushing hard for aggressive rate cuts calling for reductions of at least three percentage points, most economists and market participants don’t see the Federal Reserve making any immediate moves.
The central bank’s benchmark rate has held steady between 4.25% and 4.50% since early 2025, and Fed officials have been clear about their cautious approach.
Inflation is still the Fed’s biggest concern.
Although it’s come down from the highs of 2022, it’s yet to settle below the central bank’s 2% comfort zone.
What’s added to the uncertainty is the wave of new tariffs President Trump has rolled out against several trading partners.
For Fed officials, that’s introduced a fresh layer of complexity these tariffs could push up prices, strain supply chains, and slow economic momentum.
With so many moving parts, the central bank is trying to avoid acting too quickly and risking unintended consequences.
Still, there are signs of internal debate at the Fed.
Vice Chair Michelle Bowman and Governor Christopher Waller have both indicated they’re open to rate cuts if inflation remains in check and the broader economy begins to soften.
Speaking at a conference in Prague earlier this month, Bowman said she’d support a cut at the upcoming July meeting if data show inflation is under control.
Chicago Fed President Austan Goolsbee echoed some of that sentiment, noting that once trade-related uncertainties clear, the central bank might need to ease policy to head off the risk of stagflation, a combination of slowing growth and sticky inflation.
He stopped short of calling the current situation stagflation but said it’s a scenario the Fed wants to avoid.
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