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Welcome back, investors. The policy tug-of-war between the Fed and President Trump continued with colorful commentary over the last 48 hours. Neither seem able to stand one another and both want different things, but only one controls monetary policy.

Stagflation or ‘Too Late’?

For such a consequential week in markets, investors were met with few surprises. 

On Wednesday, Federal Reserve Chairman Jerome Powell opted to keep interest rates unchanged on account of still-elevated uncertainty around trade policy.

While the Fed maintained its forecast for two rate cuts in 2025, he signaled that his team now expects higher inflation and slower economic growth in the months ahead.  

“We haven’t been through a situation like this, and I think we have to be humble about our ability to forecast it,” Powell said at the press conference, adding that this summer will bring more news on how tariffs are impacting the economy. 

As Opening Bell Daily readers know, inflation has come in cooler-than-expected every month of 2025 and the labor market has quietly crumbled at the edges since the turn of the calendar.

In Powell’s view, however, the data do not yet justify rate cuts because of the perceived uncertainty coming out of the White House.

His latest comments underscore that the central bank instead anticipates a stagflation-like scenario — hence the hesitance to ease monetary policy. 

For 2026, the Fed lowered its growth outlook by two-tenths to 1.6%, and it raised its PCE inflation estimate by two-tenths to 2.4%. 

Keep in mind, various measures of inflation expectations have continued to cool while the Fed’s own models project GDP growth of 3.4% for the second quarter, which would mark the strongest quarter since mid-2023.

Out of the 19 Fed policymakers, 10 of them see at least two rate cuts this year.

Seven of them see zero cuts, however, a jump from the four voters who held that view in March. 

“After the June meeting, we still don't expect any rate cuts this year,” said Bank of America strategist Aditya Bhave. “A large share of the [Fed] committee has moved towards this view, and we expect the migration to continue as tariff-driven inflation starts to hit the data.”

President Trump, for his part, called out Powell once again on Wednesday, reminding reporters that inflation has collapsed since January. 

“We have a stupid person frankly at the Fed,” Trump said.

“Europe had 10 cuts and we have none. I guess he’s a political guy, I don’t know. He’s a political guy who’s not a smart person, but he’s costing the country a fortune.” 

Meanwhile, on Thursday the Bank of England held rates steady like the Fed, while the Swiss National Bank lowered its benchmark rate to zero.

The president continued: 

To be clear, it’s worth noting that the Israel-Iran conflict has introduced an unanticipated variable in the Fed and the White House’s inflation calculus. 

Before missiles started flying just a week ago, international oil prices had collapsed nearly 20% in five months.

With crude oil now reversing course higher, inflation could conceivably follow suit. 

Market snapshot

Elsewhere

🌍️ The world is bracing for what comes next in the Middle East. President Trump is weighing options for the Israel-Iran conflict, and the White House insists that any Iran deal needs to include “no uranium enrichment.” European foreign ministers are set to meet with Iran reps in Switzerland today. (CNBC)

📉 Imports are falling at California ports. The trade war with China is cutting into shipments at the nation’s busiest port complex that includes LA and Long Beach. In May, those ports saw a 24% drop of incoming containers from April, marking the lowest import volumes since July 2023. (WSJ)

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Rapid-fire

• Oil prices climbed again after Israel vowed to intensify attacks on Iran (CNBC)

• Democratic lawmakers in Texas called for Tesla to delay its robotaxi launch, though it’s unlikely to be effective (Barron’s)

• Jerome Powell is following the hawkish footsteps of Fed Chairs Greenspan Bernanke, and Yellen (Opening Bell Daily)

• Google is using YouTube videos to train its AI video generator (CNBC)

• Republican senators are divided on whether to eliminate clean energy subsidies and funding (WSJ)

• Stablecoins are eating the world and Wall Street can’t get enough (Pomp Letter)

• The US added more than a thousand millionaires a day in 2024 (CNBC)

• Take the red pill of finance (and memes)

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Last thing

About me

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.

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