In testimony before the Senate Banking Committee today, Federal Reserve Chair Jerome Powell stuck to last month’s message, saying policymakers “do not need to be in a hurry” to adjust interest rates further.

Powell largely shied away from weighing in on tariffs and other policies of the Trump administration. He did, however, defend his employees, saying they may be overworked but that the agency is not overstaffed. The remark could be seen as an implicit rebuke of Elon Musk and his attempt to gut federal agencies on behalf of President Donald Trump. Treasury yields rose and stocks fluctuated on Powell’s reiteration that the central bank is in no rush to cut rates. Bonds fell across the curve, with money markets still fully pricing in one rate cut by the Fed this year. 

When Powell did touch on tariffs, it was largely prospective, saying it’s too soon to measure their economic impact. But he did acknowledge that “a possible outcome” of Trump’s approach is upward pressure on inflation, a result many economists have been predicting.

Indeed, four years after blasting US fiscal and monetary policymakers for excessive stimulus, former Treasury Secretary Lawrence Summers warned there’s danger of another breakout in price pressures. “This is probably the most sensitive moment we’ve had for an escalation in inflation since the policy errors of 2021,” Summers said on Bloomberg Television’s Wall Street Week with David Westin. —Jordan Parker Erb

What You Need to Know Today

Ford Chief Executive Officer Jim Farley is to travel to Washington tomorrow to warn members of Congress that Trump’s proposed 25% tariffs on Canada and Mexico would “blow a hole” in the US auto industry. The impact of the tariffs would be “devastating” for American automakers, Farley said today. They would also provide a “windfall” to Asian and European rivals that wouldn’t face similar levies on cars they import from their home regions, he told the Wolfe Research automotive conference in New York. Farley has been among the US auto industry’s most outspoken leaders about the ramifications of Trump’s steep new levies, which could add $60 billion in costs to the sector, according to consultant AlixPartners.

Trying to make Wells Fargo a force on Wall Street. In January, Fernando Rivas took sole control of the bank’s corporate and investment bank, and with it a mandate from Chief Executive Officer Charlie Scharf: Grow the firm’s presence on the Street. His newly elevated position—following the retirement of co-head Jon Weiss—puts him front and center in Scharf’s effort to remake the bank. And it’s no small task: Wells Fargo’s trading revenue and investment banking fees last year were about the same as what JPMorgan earned in the fourth quarter alone. 

Fernando Rivas Source: Wells Fargo & Co.

Insurance giant Travelers say it expects about $1.7 billion in pretax losses from the wildfires that devastated the Los Angeles area last month. The estimate includes costs from the insurance firm’s personal and commercial segments, as well as assessments from the California FAIR Plan and recoveries from reinsurance. Making matters worse, Southern California is about to get its heaviest rainfall of the season, increasing the risk of floods and mudslides, especially in the areas scorched by the Palisades and Eaton fires. While the rain is to begin later today, flood and flash-flood watches have been posted for Thursday.

Trump has been signing more executive orders this afternoon, including one directing agency heads to coordinate with Musk to slash their workforces. Agencies will be permitted to hire no more than one employee for every four workers leaving the government, with exceptions made for law enforcement, national security, immigration and public safety roles. It’s part of Trump’s ongoing attempt to eliminate federal employees, but it remains unclear if Musk, from an office within the White House, has the authority to enact mass firings. And as the multibillionaire CEO continues to attack America’s judiciary, yet more of the administration’s attempts to slash agencies and Congressional funding have been blocked as potentially illegal or unconstitutional. 

Apple’s newest Beats headphones are taking a page out of AirPods’ playbook. The long-anticipated Powerbeats Pro 2, released Tuesday, add capabilities found in Apple’s AirPods, including transparency mode, which makes it easier to hear outside noise, and the H2 chip for better sound. (They also have heart rate monitoring, a first for any Apple-designed earbuds.) The release follows a slow holiday season for Apple’s wearables business: Sales at the division, which also includes home products and accessories, fell almost 2% in the December quarter to about $11.8 billion.

Embattled New York City Mayor Eric Adams is feeling the heat from his political rivals (again). After months of friendly back and forth between Adams and Donald Trump, the new administration in Washington instructed its federal prosecutors to drop a sprawling corruption prosecution of the former New York City police captain. City Comptroller Brad Lander slammed Adams, saying the Democrat should resign. Lander, who plans to challenge Adams in the mayoral primary later this year, said Adams is now more beholden to Trump, a Republican, than to the interests of his own constituents. In case you need a refresher, here’s what the Adams investigation is all about, as well as the various other probes of his administration.

Eric Adams at Donald Trump’s inauguration Photographer: Al Drago/Bloomberg

What You’ll Need to Know Tomorrow

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