Donald Trump wants the Federal Reserve to lower interest rates before the economy feels the effects of his sweeping tariffs.
The president's comments came after Fed Chair Jerome Powell announced Wednesday that rates would remain steady amid an "unusually elevated" uncertainty surrounding the on-and-off tariffs.
“The Fed would be MUCH better off CUTTING RATES as U.S.Tariffs start to transition (ease!) their way into the economy. Do the right thing,” Trump posted on his social media platform.
Economists, companies and Trump have acknowledged that tariffs could cause U.S. consumer prices to rise. Powell had emphasized the tariffs as playing a pivotal role in the Fed’s wait-and-see approach to rate cuts.
“We think our policy is a good place to react to what comes,” Powell said at a post-meeting news conference. “We think the right thing to do is to wait here for greater clarity about what the economy is doing.”
Powell theorized that while tariffs could raise inflation in the short term, the effects would calm over time. But lower rates combined with tariffs could cause more inflation, CNBC reported.
“Looking ahead, the new administration is in the process of implementing significant policy changes in four distinct areas: trade, immigration, fiscal policy and deregulation,” Powell said. “It is the net effect of these policies that will matter for the economy and for the path of monetary policy.”
Trump also posted that April 2 is “Liberation Day” — a reference to his plan to implement reciprocal tariffs on that day.
“It’s a liberation day for our country because we’re going to be getting back a lot of the wealth that we so foolishly gave up to other countries, including friend and foe,” Trump said to reporters on Monday, according to The Washington Post.
