Trump urged Fed Chair Jerome Powell to cut interest rates immediately, citing falling inflation and strong job numbers.
The Federal Reserve remains cautious, with Powell stating the central bank will wait for more clarity amid tariff uncertainties.
Markets are pricing in multiple rate cuts this year, even as Trump’s tariff moves raise fresh fears of recession and price hikes.
President Donald Trump, never shy about weighing in on monetary policy, took to Truth Social Friday with a familiar message for the head of the Federal Reserve: cut rates now.
“This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. He is always ‘late,’ but he could now change his image, and quickly,” Trump posted, adding, “Energy prices are down, Interest Rates are down, Inflation is down, even Eggs are down 69%, and Jobs are UP… CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!”
🚨 DONALD TRUMP: “This would be a PERFECT time for Jerome Powell to cut interest rates” 👀 pic.twitter.com/Osto20ue31
That post hit just as markets were already wobbling from the aftershocks of Trump’s sweeping new tariff plan unveiled earlier in the week—one that’s stirring up fears of a slowdown and maybe even a full-on recession.
Fed in No Rush (Yet)
The tariffs, which have rattled investors and economists alike, could actually work against Trump’s wish. The Fed has paused its rate cuts recently, citing sticky inflation. Now with the possibility that these tariffs push prices up again, Powell and company may be even more hesitant to ease.
Speaking at a press event in Virginia on Friday, Powell didn’t say much to suggest a change of course was coming anytime soon.
“We’re well positioned to wait for greater clarity,” he said, noting the tariffs were “significantly larger than expected.”
Markets Already Moving
In the bond market, things are already shifting. The 10-year U.S. Treasury yield has dipped under 4% this week, a classic move when investors get spooked and start bracing for economic pain.
Traders now think the Fed might cut rates four times this year—double what the central bank projected last month, according to the CME FedWatch tool.
But whether the Fed moves or waits, Trump seems unfazed by the turmoil. He likened the market’s dip to “a patient getting surgery”—painful, sure, but part of a bigger plan.
Powell, for his part, kept things cool when asked about Trump’s remarks: “I make it a practice not to respond to any elected officials’ comments… it’s just not appropriate for me.”
Still, the tension’s familiar. During his first term, Trump regularly clashed with Powell over interest rates, and speculation’s already building that, if re-elected, Trump might try to show Jerome Powell the door—though both have said that’s not happening… for now.
