Trump asks Fed to cut rates as officials weigh economic impact of tariffs

Fed's Powell downplayed simmering concerns about a slowdown but acknowledged tariff uncertainty was a factor and already contributing to goods inflation

By Derek Wallbank and Josh Wingrove

 

President Donald Trump said the Federal Reserve should cut rates, splitting with the US central bank as officials weigh the economic cost of his tariff push.  

“The Fed would be MUCH better off CUTTING RATES as USTariffs start to transition (ease!) their way into the economy,” Trump said in a post on Truth Social. “Do the right thing. April 2nd is Liberation Day in America!!!”

 

Trump’s post Wednesday evening comes as his administration prepares to unveil a fresh wave of tariffs, which Federal Reserve Chair Jerome Powell signaled was hanging over forecasts. 

 

Federal Reserve officials held their benchmark interest rate steady for a second straight meeting, as expected. Powell downplayed simmering concerns about a slowdown but acknowledged tariff uncertainty was a factor and already contributing to goods inflation, but may prove transitory.

 

Trump’s administration is preparing to announce a fresh wave of tariffs on April 2, though the exact scope isn’t clear. Trump has promised so-called “reciprocal” tariffs on at least some nations, though his administration has not specified which ones or at what rate, and his key economic advisers have competing views on the best way to approach tariff policy. 

 

The public push back on interest rates comes as the Trump White House tries to make its case for stiffer tariffs amid a mixed economic picture in the US. Inflation has not abated as much as American consumers would like. High interest rates are squeezing the housing market, and economists now see economic growth slowing in the upcoming months. 

 

Trump has sent repeated mixed messages on the Fed — at times calling for cuts and otherwise declining to intervene. Similarly, during the campaign, he vacillated on how independent he said the Fed should be from the White House.

 

Trump has said he intends to allow Powell, whom he appointed to the post in 2018, to serve out the remainder of his term. Yet he also cast Powell’s decision to cut interest rates before the November presidential election as politically motivated and intended to bolster Democrats.

 

Trump ultimately prevailed in the election and has mused in the past about seeking to exert more influence over the central bank, which traditionally maintains independence from the White House. He has said a president should be able to weigh in on interest rate decisions.

 

“I don’t think I should be allowed to order it, but I think I have the right to put in comments as to whether the interest rates should go up or down,” Trump said in an interview with Bloomberg News at the Economic Club of Chicago in October.

 

Many of his top economic advisers, however, have argued that the Fed must remain independent to preserve people’s faith in the US economic system and the markets.

 

Earlier Wednesday, Trump’s national economic adviser, Kevin Hassett, stressed to reporters that the president and White House officials “very much respect the independence of the Fed.”

 

Even so, he made clear to reporters he differed with the Fed’s growth forecast, saying he anticipated a 2.5 per cent growth rate. Fed officials are now predicting a 1.7 per cent expansion.