Powell Holds Firm as Fed’s Dot Plot Tilts Hawkish
Key Takeaways
- Despite geopolitical unrest and internal Fed tensions, Powell is seen holding firm on his policy view
- The Fed’s updated dot plot shows a clear shift toward higher-for-longer rates
- Political dynamics are intensifying inside the Fed, with 2026–2027 projections revealing a hawkish tilt
Powell Navigates Shifting Currents Inside the Fed
Amid rising geopolitical tensions and internal friction at the Federal Reserve, StoneX Senior Advisor Jon Hilsenrath expected Chairman Jerome Powell to stick to his script in the semi-annual Humphrey-Hawkins congressional testimony. Given Iran’s muted response to U.S. military action and the resulting drop in oil prices – Hilsenrath sees little reason for the Fed to shift course, noting that the central bank has historically responded cautiously to oil shocks, weighing inflation risks against potential job market strain.
A Closer Look at the Dot Plot Drift
Beneath the Fed’s seemingly steady median forecast of two rate cuts in 2025 lies a noticeable hawkish drift. The number of officials who now foresee no cuts this year rose from four to seven since March. Additionally, more Fed members now project rates will remain above 3.5% through 2026 and above 3.25% through 2027. “The central bank is not showing strong interest in cutting rates as much as the President wants or as much as the dovish governors imply,” Hilsenrath writes.
This internal shift reinforces the Fed’s resistance to political pressure and suggests that a new chair, should one be appointed, would have to contend with a committee that leans hawkish.
Politics at Play Inside the FOMC
Governors Chris Waller and Michelle Bowman have recently made public statements supporting a rate cut in July. Hilsenrath interprets these not as a genuine signal of Fed policy, but as part of a growing political divide within the institution. Both Waller and Bowman are Trump appointees, with Waller even being floated as a possible replacement for Powell. Their dovish push, according to Hilsenrath, reflects more political posturing than policy pivoting.
With Powell facing pressure from Republican lawmakers pushing for rate cuts and Democrats urging caution, Hilsenrath predicted the Fed Chair wouldn’t flinch. Still, the political backdrop could set the tone for a contentious leadership transition in 2026.
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–– Written by: Andy Catsimanes
–– Expert: Jon Hilsenrath, Senior StoneX Advisor
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