US Federal Reserve Chairman Jerome Powell and US President Donald Trump.
Craig Hudson | Evelyn Hockstein | Reuters
President Donald Trump on Friday called for Federal Reserve Chairman Jerome Powell to cut interest rates.
“This is the best time for Fed Chairman Jerome Powell to cut interest rates. He’s always “slow,” but he can now change his image and can change quickly,” Trump said in a post on the Truth Society. “Energy prices are falling, interest rates are falling, inflation is down, eggs are down 69%, and jobs are all going up within two months. A big win for America.
Trump’s post is due to the rapid selling of the global stock market. The president’s new tariff policy, announced Wednesday, raised concerns about a global economic slowdown.
The new trade policy could also be a barrier to cutting the Federal Reserve system. The central bank suspended rate cuts at a recent meeting. This is because progress in reducing inflation appeared to have taken away the layers. New tariffs could at least temporarily lead to widespread rises in prices, which further complicates the inflation picture.
On Friday, Powell told business journalists in Arlington, Virginia that the Fed is “in a good position to wait more clearly” before making changes like interest rate cuts. He also said the tariffs announced were “significantly greater than expected.”
Market-based interest rates have already fallen sharply this week. 10 years of US Treasury yield It’s currently under 4%. Treasury yields often drop when investors worry about a possible recession.
According to CME’s FedWatch tool, the movement in the Fed Reserve Fund futures market means that at least four rate cuts from the central bank this year will be reduced by 0.25 percentage points from the central bank. At a meeting last month, the central bank predicted just two interest rate cuts.
Trump has downplayed concerns about market volatility this week, comparing reactions to patients who have had surgery at one point.
When asked about these comments on Friday, Powell said, “I don’t want to be seen as doing that because I practice not responding to the comments of elected officials. That’s not appropriate for me.”
During his first term as president, Trump regularly commented on central bank policies and was often at odds with Powell. That led to speculation that he might consider removing the Fed’s chair before his term ends next year. Trump said in December that he had no intention of firing Powell, and the Fed chairman said he doesn’t think the president is legally allowed to do so.
The Fed has two main goals to promote price stability and maximize employment. A March non-farm salary report released Friday showed that the unemployment rate rose slightly to 4.2%, but the increase in 228,000 jobs was more than expected.
Friday’s employment report does not reflect the impact of the tariffs released this week.
