President Donald Trump called for lower interest rates, seeking to raise pressure on the Federal Reserve as he moves to implement a second-term economic agenda high on tariffs and expanding tax breaks.
“Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs,” Trump said Wednesday in a post on social media.
The president’s comments came ahead of testimony from Fed Chairman Jerome Powell before the House Financial Services Committee later Wednesday. He posted them less than an hour before new data showed underlying US inflation rose 0.4% in January, more than forecast, dimming the likelihood of immediate rate cuts.
Trump in a subsequent post sought to blame the persistent inflation on his predecessor former President Joe Biden.
The central bank chief told senators Tuesday there is no need to rush to adjust interest rates, a further signal that the Fed will be patient before lower borrowing costs again. The Federal Open Market Committee lowered rates at each of its last three meetings in 2024 but policymakers held the bank’s key policy rate steady in January.
Powell has repeatedly declined to comment on how the Fed would respond to the president’s policy changes, emphasizing that it depends on what is actually enacted and how the mix of proposals interact to affect the economy.
David Kelly, chief global strategist for JPMorgan Asset Management Inc., predicted Powell would avoid responding to Trump’s remarks during his testimony, and said the Fed should not rush to cut rates, citing uncertainty over tariffs, Trump’s efforts to deport undocumented migrants and a massive tax package being negotiated in Congress.
“The Fed has to think about all of those things. So I think when they’ve got clarity on immigration, tariffs and taxes this year, then they can take a look at, do we need to make any further adjustment, but right now they shouldn’t do it,” Kelly said Wednesday on Bloomberg Television.
Trump’s comments mark a shift from remarks earlier this month, when he indicated that the Federal Reserve had made the correct decision, saying that “holding the rates at this point was the right thing to do.”
While presidents traditionally refrain from commenting on the bank’s policymaking, Trump has regularly weighed in on the central bank’s handling of interest rates, frequently jabbing at Powell during his first term in the White House.
In a virtual address to financial, business and political leaders at Davos last month, Trump had said he would demand an immediate drop in interest rates, which he blamed for increasing deficits. During the presidential campaign, Trump told Bloomberg News that he should be able to tell Powell how he thinks interest rates should change, and he has suggested that as a businessman he knows the issue well.
Trump’s policy proposals have added uncertainty to the US economic outlook as he ramps up tariffs on imports from China and on steel and aluminum. Trump has also delayed tariffs against Canada and Mexico and has promised to unveil reciprocal trade levies on countries as soon as this week.
Most mainstream economists say those measures threaten to raise pressure on inflation, a major worry for voters and one which helped propel Trump’s return to the White House.
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