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Trump says he’s not planning to fire Powell... President Donald Trump said on Wednesday he is not planning to fire Federal Reserve Chair Jerome Powell, after a Bloomberg report that the president is likely to do so soon sparked a sharp market reaction. Trump, who has regularly criticized Powell for not cutting interest rates, said the report wasn’t true, but confirmed he had floated the idea with Republican lawmakers on Tuesday evening.
Powell, who was nominated by Trump in late 2017 to lead the Fed and then nominated for a second term by President Joe Biden four years later, has repeatedly said he intends to serve out his term that runs through May 15, 2026. A recent Supreme Court opinion has solidified a long-standing interpretation of the law that the Fed chair cannot be fired over policy differences but only “for cause.”
National Economic Council Director Kevin Hassett is the early frontrunner to replace Powell as Fed chair next year, people familiar with the process told Bloomberg.
Hassett and Kevin Warsh are the top two contenders to lead the Fed. Treasury Secretary Scott Bessent is advising on selection — but could get the job himself if others fail to impress — while Fed governor Christopher Waller remains the dark horse, said the people.
Beige Book notes continued weakness for ag sector... Economic activity increased slightly from late May through early July, according to the Fed’s Beige Book highlighting economic activity in the 12 districts. Five districts reported slight or modest gains, five had flat activity and the remaining two noted modest declines in activity. That represented an improvement over the previous report, in which half of districts reported at least slight declines in activity. Uncertainty remained elevated, contributing to ongoing caution by businesses. Activity in the agriculture sector remained weak. Specific to agriculture, districts noted:
Chicago: Expectations for 2025 farm income were little changed over the reporting period, with an improved outlook for livestock operations offsetting worse prospects for crop operations. Corn and soybean crops got off to good starts in most of the District, although progress lagged in much of the southern part of the District due to late planting. Costs for agricultural services, such as spraying, were higher, and as a result, contacts expected to use less fertilizer and pesticides during the growing season. Contacts noted that even though trade uncertainty had eased, they continued to be concerned about the potential for losing some export opportunities. Corn and soybean prices fell over the reporting period. Hog, cattle, and milk prices increased, while egg prices decreased again.
St. Louis: Agriculture conditions have remained strained. Contacts shared that sales in June were down and that forecasts for the rest of the year were weak. Farmers in Arkansas were concerned that poor crop conditions would limit yields, making it more difficult to generate a profit with low commodity prices. Some farmers reported reducing fertilizer usage due to tight budgets and others are still trying to find additional financing to make it to harvest. An accountant reported reducing billing rates for all their farmers this season due to concerns about their financial stability.
Minneapolis: District agricultural conditions remained weak overall, but crop progress was solid in much of the District. According to preliminary results from the most recent Ag Credit Survey, a strong majority of respondents reported that farm incomes decreased in the second quarter from a year earlier. The majority of corn and soybeans were in good or excellent condition, and most of the eastern portions of the District were free of significant drought. However, drier conditions prevailed further west, and wheat conditions were weaker. An ethanol producer described demand as steady.
Kansas City: The Tenth District farm economy remained subdued and agricultural credit conditions deteriorated slightly. Prices of major row crops remained low and kept profit opportunities narrow for most producers. Farm loan repayment challenges across the District increased slightly compared with the previous year, with weakening in repayment more pronounced in areas most heavily concentrated in crop production. In other areas, strong cattle prices continued to provide some support to farm finances. A lender in Kansas noted that strength in the cattle market was supporting diversified farming operations and keeping them afloat. Looking ahead, weak crop profits remained a key issue cited by producers, as well as uncertainty surrounding the outlook for global trade and domestic demand and elevated concerns about financial conditions in the coming year.
Dallas: Drought conditions continued to ease, and timely rainfall boosted crop conditions across the District. Crop production prospects are favorable so far, but prices remain unprofitable for most farmers. Cattle prices continued to set new records. Wholesale beef prices were also in record territory. Contacts attributed the price strength to lower beef production paired with robust consumer demand. Contacts noted concern in the agricultural community over continued tariff and geopolitical uncertainty. A survey of agricultural bankers found that changes and uncertainty in trade policy have led to a decline on net in the rate of loan repayments, loan demand, and net farm income, and they anticipate this downward trend to continue.
San Francisco: Conditions were weak overall in agriculture and resource-related sectors but unchanged from the prior reporting period. While exports benefited from a weaker dollar, the overall demand from abroad for fresh produce and tree nuts was below typical levels. Domestic markets remained solid, but excess supply stemming from weak export markets pulled prices down and led some farmers to hold off on investing in new equipment. Demand for California wine was reportedly down domestically and abroad, resulting in lower selling prices, reduced seeding, and the removal of some existing vineyards. Several contacts highlighted continued issues with credit availability in agriculture, particularly for smaller growers in the Pacific Northwest and Mountain West.
Producer inflation eases in June... Contrary to consumer inflation data on Tuesday, the producer price index fell to an annual gain of 2.3% in June, the lowest since last September. Core PPI, minus food and energy prices, increased 2.6%, a sharp slowdown from a 3.2% increase in May and the smallest annual rise in 11 months.
Tariff impact starts to show in June CPI report... A Sevens Report commentary noted that while June’s headline consumer price index (CPI) met broad expectations, the details revealed “some tariff price pressures may be appearing in the economy.” Headline CPI rose 2.7% year-over-year, slightly above the 2.6% estimate, driven largely by higher energy costs stemming from the Iran/Israel oil shock. Core CPI, which excludes food and energy, came in at 2.9%, in line with forecasts.
While these figures were “no worse than feared,” they still showed an uptick from May’s readings — and that alone was enough to worry markets. The price strength could mark the early signs of inflation driven by the new tariff regime — especially with more duties scheduled to take effect Aug. 1. According to Sevens Report, “There was enough in this report to keep alive concerns that tariffs will stoke inflation.”
Bottom line: While this CPI report doesn’t derail hopes for future Fed rate cuts, it weakens the case for one in September. Markets were initially unmoved, but as the Sevens Report put it: “The longer markets had to digest the report and the details of it, the more of a headwind it put on markets.”
Trump signals drug tariffs by Aug. 1, eyes higher levies on semiconductors... President Donald Trump said he’s likely to impose tariffs on pharmaceutical imports by the end of July, with semiconductor duties potentially following a similar timeline. “We’re going to start off with a low tariff and give the pharmaceutical companies a year or so to build, and then we’re going to make it a very high tariff,” Trump said, suggesting the eventual rate could climb as high as 200%.
Trump also said it would be “less complicated” to impose semiconductor tariffs and that those levies could coincide with the broader “reciprocal” tariff regime scheduled to take effect Aug. 1. That regime includes a 50% tariff on copper and tailored rates on imports from dozens of countries.
USDA ends pandemic-era RFBC program... USDA Secretary Brooke Rollins announced the termination of the Regional Food Business Centers (RFBC) program, a Covid-era initiative launched under President Joe Biden with temporary congressional funding. Calling the program “unsustainable” and inconsistent with “congressional intent,” Rollins said USDA will honor more than 450 existing grants but will not extend the program beyond current commitments.
“The Biden Administration created multiple, massive programs without any long-term way to finance them,” Rollins said, adding that USDA will redirect any unspent funds “to better support American agriculture.”
Of the 12 original RFBCs, only eight issued Business Builder grants. Those that have already made awards can continue managing them through May 2026. Four RFBCs — Great Lakes Midwest, Southeast, Delta, and Islands and Remote Areas — will be fully terminated for not having awarded any grants to date.