Trump Urges Federal Reserve to Cut Interest Rates as Tariffs Take Effect
Washington, D.C., The Gulf Observer: U.S. President Donald Trump on Wednesday called for the Federal Reserve to reduce interest rates, citing the economic impact of his trade tariffs. His remarks come as the central bank maintained its current rate levels and offered no indication of potential cuts in the near term.
“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,” Trump stated in a post on Truth Social.
Trump also reaffirmed his intention to introduce additional tariffs in early April, with April 2 designated as “liberation day.” The upcoming tariffs are expected to target major U.S. trading partners in a bid to promote what the President describes as “fair trade.”
The Federal Reserve, under the leadership of Chair Jerome Powell, opted on Wednesday to leave interest rates unchanged. Policymakers also raised their inflation outlook for 2025 while lowering growth expectations, reflecting concerns over persistent inflationary pressures.
Trump has frequently urged the Fed to implement rate cuts, arguing that lower borrowing costs would bolster U.S. economic expansion. However, central bank officials have remained cautious, wary of inflation risks exacerbated by higher tariffs.
Economic analysts warn that the President’s tariff policies could ultimately raise costs for U.S. importers, who may pass on the increased expenses to consumers. This, in turn, could contribute to inflation, complicating the Fed’s efforts to maintain price stability.
Trump’s recent stance on the Federal Reserve has also sparked debate over the central bank’s independence. His decision to dismiss two Democratic commissioners from the Federal Trade Commission earlier this week has further fueled concerns regarding potential political influence over economic institutions.
Despite mounting pressure, Powell has reaffirmed the Federal Reserve’s autonomy, stating that he will serve his full term as Chair until May 2026. Powell, who was initially appointed by Trump during his first term, has emphasized the importance of data-driven decision-making in shaping monetary policy.
The President’s latest trade measures have already seen increased tariffs imposed on China. However, Trump’s approach to Canada and Mexico remains inconsistent, given the countries’ close economic ties with the United States.
As April 2 approaches, market participants and policymakers alike will be closely monitoring the administration’s next steps, assessing the broader implications for trade, inflation, and overall economic stability.
