US President Donald Trump responds when he met NATO Executive Director Mark Latte (not pictured) on March 13, 2025 at the oval office of the White House in Washington, DC.
Evelyn Hockstein |Reuters
President Donald Trump is pushing the central bank to cut interest rates as a backstop in his tariff plans after he primarily entrusted the Federal Reserve business.
In a Wednesday night post on the Truth Society, Trump encouraged Chairman Jerome Powell and his colleagues to ease the policy as the administration enters the next phase of aggressive trade policy.
“It would be much better for Ustariff to move its path to the economy (easy!) and the Fed to cut more,” Trump wrote. “Do the right thing. April 2nd is America’s liberation day!!”
Missive appeared hours after the Powell-led Federal Open Market Committee voted to stabilize key interest rates, but assuming a quarterly percentage point increment that policymakers prefer, it showed that two interest rate cuts are likely by the end of the year.
The April 2nd mention is the time when the administration will uncover the results of research on world trade, which could potentially result in further tariffs to level what is considered an unfair playing field.
At a post-meeting press conference, Powell dealt with the tariff issues multiple times, primarily repeating the uncertainty impact that could justify the Fed’s cautious current stance. Additionally, Powell said the job could raise inflation in the short term, but the impact will recede over time.
“I think it’s kind of a basic case. But like I said, we really can’t know that. We really need to see how things really work,” he said.
However, lower fees can be combined with tariffs to stir up more inflation. The market expects to wait until June before the Fed cuts. Additionally, Fed rate reductions are not always directly fed to a low borrowing rate. In the best case scenario, lower rates will strengthen the price increase expected from taxation.
In contrast to his first term in office, Trump has taken a large handoff approach to the Fed’s policymaking, except for a few comments he made shortly after taking office as a central bank. Trump in January said he “requires interest rates drop soon,” but he failed to follow the threat.
In fact, Treasury Secretary Scott Becent said the White House is focusing on cutting Treasury yields over a decade, in order to reduce long-term borrowing costs than the Fed-controlled short-term federal funding rate.
Trump begged Powell and took him there for the last time he raised the fee. At one point they called them “boneheads” and compared them to golfers who couldn’t put their chairs on.
The Fed’s forecast on Wednesday showed full reduction points for the next three years in the funding rate, which is currently targeted at 4.25% to 4.5%.
