President Trump once again put pressure on the Federal Reserve, and on social media on Wednesday evening, he said central banks are “much better” to lower interest rates as tariffs come into effect.
Comments to Truth Social came after the Fed maintained its prior forecast for two interest rate cuts at some point this year after it stabilized on Wednesday for its second meeting.
However, what has changed for the central bank is due to inflation (higher) and low economic growth outlook, and Fed Chairman Jerome Powell said the reason for driving the change is uncertainty stemming from planning a proactive new tariff plan, in addition to new duties already imposed on China, Canada and Mexico.
The president has pledged to announce “mutual” tariffs in many countries on April 2nd.
“As Ustariffs launches the path to the economy (easiness!), the Fed will have far better cut rates,” Trump said in his post on the True Society. “Do the right thing. April 2nd is America’s liberation day!!”
Powell didn’t avoid the impact of Trump’s tariffs during his much-anticipated press conference on Wednesday.
The Fed chair said there is considerable uncertainty about exactly how much the amount is and whether price changes are “temporary” under conditions that are uncertain that Trump’s trade agenda is likely to raise prices.
Read more: What Trump’s tariffs mean for the economy and your wallet
In just one example of questions about price stability Wednesday afternoon, Powell said that inflation had previously approached the Fed’s key target, but now “it could delay further progress once tariff inflation arrives.”
Some analysts raised questions about the Fed’s overall forecast for two cuts this year, despite Trump’s trade policies shaking markets and cutting forecasts for economic growth for the rest of the year.
“Fed officials continue to believe that tariffs are underestimating the extent to which tariffs could boost inflation,” Capitol Economics said in a memo shortly after the decision on Wednesday and just before the press conference.
At other times in Wednesday’s press conference, Powell also said the exact impact of tariffs on prices is uncertain and may never be known accurately and may even be temporary.
He called the potentially “temporary” tariff price effect. This repurposed a much-discontinued term developed by the Fed and other economic officials in 2021 as prices began to rise during Joe Biden’s presidency.
The story continues
