Ready to Disappoint Again
Federal Reserve officials have a chance today to lower interest rates — though people who who navigate that world expect nothing to happen before autumn, despite the risk of infuriating President Donald Trump.
In their public remarks, policymakers have talked about wanting some clarity about the direction of the economy before they make a move. That includes understanding the impact of Trump’s trade war, something that isn’t going to be evident until tariff policy stops fluctuating. And Israel’s attacks on Iranian nuclear sites mean there are fresh questions about what’s going to happen in the global economy.
Economists, Wall Street traders, and government officials will be listening for clues about the central bank’s next move when Chair Jerome Powell comments at the end of today’s meeting.
“If Powell acknowledges the labor market is softening while inflation is cooling — that’s a buy signal for stocks because it means he is open to rate cuts later this year,” said Jim Worden, chief investment officer at the Wealth Consulting Group. “But if he pours cold water all over that idea, or even alludes to no cuts the rest of year, markets will be rattled. Traders will wonder ‘What does he know that we don’t? Does he expect inflation to pick in the second half of the year?’”
Here’s a look at the timing expectations from the Bloomberg survey of economists.
And if you’re a Fed-watcher, either constantly or just for the day, here are a few solid additions to your morning reading list:
- Trump Flexes Security Powers to Keep Global Tariff Goal Alive
- Trump’s Latest Attack on Fed Zooms In on Surging Debt Costs
- Traders Pile Into Bets That Next Fed Chair Will Slash US Rates
Tax Talks Still In Progress
Senators still don’t know how the negotiations over the megabill will shake out, or whether they’ll be able to meet their goal of putting a finished product on Trump’s desk by July 4. Even so, there’s a lot to unpack in the proposals that made it into bill form.
One of the thorny parts of the package involves Medicaid, and a cost-cutting effort that has hospitals — especially rural hospitals — warning they could have trouble staying open if the Senate proposals make it into law.
“Our hospitals are gonna really get hit in a big way in West Virginia,” said Sen. Jim Justice (R-W.Va.). Health care reporter Erin Durkin explains the details. Read More
Other parts of the legislation would affect a SALT workaround popular with doctors and lawyers; a tax deduction for the owners of sports teams; the specialty firms that pay litigation costs for big cases in exchange for a cut when the cases are settled. Other parts of the legislation already have had an impact on the stock price of solar energy companies even though it’s just an incomplete bill, not a law.
Jack Fitzpatrick and Ken Tran have a lot more in this morning’s BGOV Budget.
Border Security Boss
The Senate’s ready to vote on a new chief to oversee security at the US border and enforce the still-a-work-in-progress import tariffs. Confirmation of retired Border Patrol chief Rodney Scott to lead US Customs and Border Protection is scheduled to be one of the final actions before senators depart ahead of tomorrow’s Juneteenth federal holiday.
Defense Secretary Pete Hegseth is due to return to the Hill today to answer questions about the Pentagon budget request at a Senate Armed Services Committee hearing.
Another hearing to watch will show the sentiments of key senators on the intersection of railroad track safety and automation. In testimony prepared for a Senate subcommittee, Ian Jefferies, president of the Association of American Railroads, argues for automated track inspection and other regulatory changes, BGOV’s Phineas Hogan reports.
Current regulations don’t let railroads use the combination of automation and manual inspections they consider optimal, according to the advance testimony.
For more on what to anticipate on Capitol Hill, check out this morning’s Congress Tracker.
In the Middle East
The USS Nimitz aircraft carrier strike group is sailing to the Middle East ahead of schedule, the first significant move of US military assets to the region as Iran and Israel exchange fire for a sixth day.
While the US is Israel’s closest defense partner and arms supplier, Trump has so far resisted calls from some political allies to join in strikes against Iran and its nuclear program.
The White House announced Trump would meet Pakistan’s army chief today. The South Asian country — a key ally of Iran — has expressed a willingness to play a role as a mediator between the US and Iran. Read More
Iran’s Supreme Leader Ayatollah Ali Khamenei said today that his country won’t surrender to Israel. Read More
See also: Bunker-Buster Bomb Draws Focus as Trump Weighs Iran Options
Before You Go
Cost of clemency: The Democrats’ staff on the House Judiciary Committee added up the fines and restitutions on the line for Capitol rioters and white-collar fraudsters who’ve been granted pardons or shorter sentences. They concluded the clemency could stop the payment of up to $1.3 billion in penalties to the government and victims, Suzanne Monyak reports. Read More
Live-in child care: The J-1 exchange visitor visa program used by thousands of au pairs and camp counselors from abroad was hit with the same pause on consular interviews blocking visa appointments for foreign college students on F-1 visas, Andrew Kreighbaum reports. Read More
MAGA Battle: Texas Sen. John Cornyn is an unusual underdog fighting for his political life against state Attorney General Ken Paxton in a Trump-dominated Republican party primary, Lillianna Byington and Greg Giroux report. Read More
Editor’s Note
Yesterday’s edition of Starting Line incorrectly described the Minnesota shootings. A state legislator and her husband were killed.
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