On Wednesday night, President Donald Trump criticized the Federal Reserve, calling for reduced interest rates immediately following its decision to maintain current lending prices.
This was just another example of Trump exerting pressure on the Federal Reserve, even though there has been an established tradition of keeping politics separate from the institution’s operations.
Trump contended that reducing interest rates would better prepare the economy for the impact of tariffs set to escalate in the coming weeks.
The Federal Reserve should definitely LOWER interest rates once U.S. tariffs begin to have an impact on the economy," Trump posted on Truth Social, emphasizing, "Make the correct decision.
He didn't provide additional details, but in January, he also requested reductions in interest rates, pointing to what he termed the probability of decreasing oil prices.
While addressing an audience in Washington, D.C., on Wednesday afternoon, Federal Reserve Chairman Jerome Powell indicated that a significant portion of the current inflation can be linked to the tariffs implemented under the Trump administration. He also called for a careful and watchful strategy as the economic policies of the incoming administration unfold.
French scientist barred from entering U.S. following scrutiny of anti-Trump comments by border agents; U.S.: Radio Free Asia suspends employees without pay due to Trump's decision to end grants; French politician urges return of Statue of Liberty, criticizes U.S. for aligning with 'dictators'Even though the Federal Reserve decided not to alter its primary interest rate, it updated its forecasts, expecting slower economic expansion and elevated inflation by year-end as opposed to what was projected in December.
Powell recognized the economic unpredictability, highlighting the expected "substantial shifts" under the Trump administration in sectors like trade, immigration, and regulatory policies.
“There is significant uncertainty regarding these changes and how they will impact our economic forecast,” Powell stated. “Our priority now is distinguishing the relevant signals from the background noise.”
Economists informed ABC News earlier that if the Federal Reserve increases interest rates to combat inflation caused by tariffs, it could deter lending and hinder economic growth.
Conversely, they pointed out that if the Fed lowers interest rates to boost economic activity amid a possible deceleration, this could lead to increased expenditure and potentially exacerbate price hikes.
Trump’s rare public rebuke of the Federal Reserve came just weeks after his tariffs ignited a global trade dispute, sending stock markets into turmoil and fuelling concerns about a possible recession.
Even with these concerns, certain economic metrics continue to show strength. Latest employment figures indicated consistent job growth and an unemployment rate close to all-time low levels. While inflation has dropped significantly from its high in 2022, it still stands roughly one percent higher than the Federal Reserve’s targeted figure of 2%.
Trump additionally requested reduced interest rates in January, merely days prior to the Federal Reserve deciding to keep them steady.
Following that decision at a press conference in Washington, D.C., Powell chose not to address Trump’s remarks, deeming such a response "inappropriate."
The public can rest assured that we will proceed with our tasks just as we have before," Powell stated, reaffirming that the Fed is dedicated to "utilizing our resources to reach our objectives.
After the most recent interest rate announcement, a journalist once more asked Powell if Trump’s pressure might impact the Federal Reserve’s judgments. Powell gave a concise reply, sticking to his previous stance.
I believe I addressed that question in this same room not long ago," Powell stated. "I see no reason to alter my previous response and do not have anything new to add at present.
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