- The president is back to calling on the Fed to lower interest rates.
- In a post on Truth Social, Trump said the Fed would be “better off” cutting rates as he implemented tariffs.
- It’s not the first time Trump has demanded the US central bank cut rates.
President Donald Trump is dialing up the pressure on the Fed again, taking to Truth Social on Wednesday night to ask the central bank to take interest rates lower.
“The Fed would be MUCH better off CUTTING RATES as US Tariffs start to transition (ease!) their way into the economy. Do the right thing,” Trump wrote on the social media platform Wednesday night.
The post came hours after the Fed concluded its March policy meeting, during which central bankers kept interest rates at their current levels.
It’s not the first time Trump has tried to exert his influence on the direction of monetary policy. Addressing the World Economic Forum earlier this year, Trump said he would demand that “interest rates drop immediately.”
Last year, concerns were also raised about the Fed’s independence after reports that allies were drafting plans for Trump to exert more power over the central bank’s policy decisions.
The Fed, for its part, isn't signaling rate cuts in the near-term. In their updated projections for the economy, Fed officials lifted their expectations for inflation in 2025, while lowering expectations for expected growth.
Part of the recent pressure on inflation is due to Trump's tariff plan, Fed Chair Jerome Powell said at a press event on Wednesday, though he said it was difficult to tell precisely how much tariffs have contributed to inflation.
"Clearly, some of it, a good part of it, is coming from tariffs," Powell said, though he noted that the impact of tariffs on inflation could be short-lived.
According to its latest Summary of Economic Projections, the central bank expects inflation to fall back to 2% by 2027.
"No surprise that the monetary policy-setting committee kept target rates unchanged today. The committee is in the midst of policy fog as they await the impact from upcoming tariffs," Jeffrey Roach, the chief economist at LPL Financial, wrote on Wednesday, adding that he still expects inflation to cool enough to warrant a rate cut in June.
"The Fed's decision to leave rates unchanged today was largely expected — the central bank opted to take a wait-and-see approach as the contours of trade policy continue to take shape," Jason Pride, the chief of investment strategy and research at Glenmede, said. "The key addition to the statement was the recognition that uncertainty around the economic outlook has increased,' which seems to be the Fed's attempt at highlighting tariff risks while avoiding directly injecting itself in the political discussion."
According to the CME FedWatch tool, markets see a 79% chance the Fed will keep interest rates level at its next policy meeting in May and a 76% probability that rates will be lower by 25 basis points or more in June.