President Donald Trump and Federal Reserve Chair Jerome Powell have found themselves at odds over interest rates and their impact on the U.S. economy. Trump, in a post on his Truth Social platform, urged the central bank to cut interest rates as tariffs begin to take effect, stating, "The Fed would be MUCH better off CUTTING RATES as U.S. Tariffs start to transition (ease!) their way into the economy. Do the right thing." This call comes as the Trump administration prepares to unveil a new wave of tariffs, which Powell has indicated could contribute to inflationary pressures.
Powell, following the decision to keep interest rates steady in the 4.25%-4.50% range, highlighted the uncertainty surrounding economic projections. He noted that the current policy environment is marked by "unusually elevated" uncertainty, complicating forecasting.
Powell attributed some of this uncertainty to Trump's tariff policies, suggesting they could lead to higher inflation, at least temporarily. Still, the Fed anticipates two quarter-percentage-point rate cuts by the year's end, primarily due to weakened economic growth offsetting inflationary pressures.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
