U.S. Treasury Secretary Janet Yellen: The Federal Reserve may cut interest rates in September or earlier

U.S. Treasury Secretary Becerra stated that given the moderate inflation impact from President Trump's tariffs, he believes the Federal Reserve may cut interest rates in September or earlier:

I think the standard is: tariffs have not brought inflation. If they follow this standard, they may act before then, but certainly before September.

I guess this tariff disarray syndrome even exists within the Federal Reserve.

Becerra pointed out that Federal Reserve officials have recently lowered their expectations for U.S. economic growth, considering that inflation has already declined since the Fed cut rates by 50 basis points in September 2024, which is sufficient to support another rate cut before September.

Currently, Trump is intensifying pressure on the Federal Reserve and its Chairman Powell, demanding a rate cut of up to 3 percentage points. Trump wrote in a post on Truth Social on Monday:

You are always acting too slowly, causing huge losses for America, urging a “significant rate cut.”

Becerra has also increased his criticism of the Federal Reserve this week, reiterating that tariffs have not triggered inflation, and even if they do, it would be a one-time increase, insufficient to justify a rate hike.

Insiders revealed that Becerra is one of the candidates likely to succeed Powell as Chairman of the Federal Reserve, whose term will expire in May next year.

On Monday, Becerra compared the Federal Reserve on Bloomberg TV to “an old man who always looks down at his feet after falling once, making it easy to fall again,” believing that the Fed's initial “fall” was its slow response to inflation in 2022.

Powell stated on Tuesday at the European Central Bank monetary policy meeting in Portugal that he does not rule out the possibility of a rate cut at the meeting on July 28-29, but he noted that if it weren't for the tariffs imposed by the Trump administration, the Fed would have cut rates long ago. “The reason we paused is that we saw the scale of tariffs was large, and all inflation expectations in the U.S. rose significantly as a result.”

The Federal Reserve has cumulatively cut rates by 1 percentage point in 2024, but has kept rates unchanged so far in 2025, waiting to see if tariffs will push inflation higher this summer.

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