Trump wants lower interest rates to ‘counteract’ the inflation from his own tariff policies

• president Donald Trump wants the Federal Reserve to reduce interest rates as an anti -slow -end economic measure and high inflation from definitions. However, the broad uncertainty makes it difficult for the Federal Reserve Bank to put an end to the current reservation pattern on price cuts.

President Donald Trump and Federal Reserve Chairman Jerome Powell is at odds.

On Thursday, Trump once again called on the Federal Reserve, specifically, to low interest rates. Just one day ago, Powell repeated the Federal Reserve’s view that the relative power of the economy means that he was not forced to rush to make a decision.

Powell said on Wednesday.

Powell Pope’s approach disturbed the main caution. In a post on social media early on Thursday morning, Trump described the rating of Powell “Chaos” and accused him of “very late and wrong.”

Trump wants to decrease interest rates to alleviate the inevitable economic slowdown, as customs tariff policies increase consumer costs and stop global trade. Powell, at the same time, he does not want to cut prices very early because he is afraid that inflation will return. Powell is also cautious because he is fighting in the unprecedented economic lands because Trump’s tariff policy is so unpredictable that the results cannot be predicted.

The issue of what to do with attention comes against a very unique economic background. The Federal Reserve has made great progress in reducing inflation from the highest levels of June 2022 by 9 %. This was noticeably achieved without Raise the unemployment rate. As of March, the inflation was 2.4 %.

With the stability of prices and the labor market remained strong, the economy (and markets) were sent in turmoil due to the sudden shock of Trump’s tariff policies. The definitions were unlike any recent trade policy, but it also continued to change regularly – sometimes even on the same day.

All this made for a level of uncertainty that investors have found difficulty in the stomach. The markets decreased, inflation expectations and fear increased in both companies and consumers. Nothing of this is useful for the economy that was previously a good tons.

The White House for the Federal Reserve

Now Trump wants to lower the first prices to reflect these effects.

“Trump may believe that low prices will help the economy and can resist any possible negative impact of the ongoing trade war,” said Francesco Bianchi, head of the Economy Department at Johns Hopkins University.

In essence, Trump wants to decrease inflation rates of the economy juice, which is expected to slow down due to its definitions. Powell said on Wednesday that the expectations of the Federal Reserve of the American Economy witnessed a “slower growth” for the next year. Some Wall Street banks, such as Morgan Stanley, also cut off GDP estimates of the United States.

But Trump’s actions did little price cuts. “I have made the White House actions difficult for the Fed Bank to reduce prices,” said Brett House, Professor of Economics at Colombia College of Business.

Most of the expected effects of definitions are likely to lead to high inflation, which usually calls for high prices, not cuts. Definitions will raise companies ’prices on any component or product they buy from a foreign resource. The sellers will pass those alongside consumers, who see the high prices of stickers. If inflation shoots, the Federal Reserve will have an option but to raise prices, unlike what Trump wants.

The Federal Reserve started the price cutting course in September 2024, with a jumbo reduction of 50 basis points. Then cut twice at the end of last year. These reductions raised the target federal funds from 5.25 % and 5.5 % to their current levels from 4.25 % to 4.5 %. In 2025, the Federal Reserve has yet to reduce prices.

“What happened in the past two weeks has already been more than bias in adherence,” said Jose Toure, senior economists in interactive intermediaries. “So it is certain that it enhances the issue.”

When asked why the General Federal Reserve began maintaining stability rates, Torres was unambiguous: “very simple.” “They started very quickly.”

After the interest rate is low, inflation began to rise again. In September 2024, the PCE index, the preferred scale of the Federal Reserve of Embolic Reserve, was 2.1 % by February 2025 up to 2.8 %. Wall Street expects between two and three interest rates in the second half of the year. The risk of lowering rates very soon is that it sends shooting prices, which is already practical certainty given the ongoing definitions.

“The risk of lowering rates very soon is that inflation crawls reserves and the markets lose confidence in the fact that the federal reserve is really committed to inflation of inflation.” Bianchi said.

When exactly to reduce rates is a sensitive budget action. Go early and high inflation, delayed and the economy can stop. The delay means not providing enough stimulation to the economy, which then descends into stagnation. However, inflation may be a more welcoming problem than the recession – childbirth, according to Torres.

“One of the decisive elements here is that in the executive branch, the inflation problem is much better than the employment problem,” Torres said. “Therefore, the opposite wind can cause poor employment. It is much worse for Americans complain that they have lost their jobs and that they cannot find a job, then the Americans complain that prices are rising.”

This story was originally shown on Fortune.com

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2025-04-17 18:03:00