President Donald Trump has once again changed his stance on the Federal Reserve, this time pressing the central bank to lower interest rates to support the upcoming trade tariffs.
In a post on Truth Social on Wednesday, Trump insisted:
“Interest rates need to be lowered, something that goes hand in hand with the upcoming tariffs!!! Let's Shake America Up!!!”
This statement was issued a day after Fed Chairman Jerome Powell said that policymakers should not rush to lower interest rates, but rather want to see how inflation develops first.
Since the beginning of his term, Trump has often pressured the Fed to cut interest rates immediately, even though he has no direct authority over the central bank. However, a few days ago, Trump praised the Fed's decision to keep interest rates on hold at its late January meeting. Now, Trump's latest statement shows another shift in narrative – from supporting stable interest rates to pressing the Fed to ease monetary policy.
Meanwhile, markets expect the Fed not to cut interest rates until at least June or July. Some analysts, including from Bank of America, even believe the Fed won’t cut rates at all in 2025 after a 1.0% cut in 2024.
Trump is now tying interest rates to his trade policy:
25% tariffs on steel & aluminum imports (effective March 12)
Additional tariffs on Mexico & Canada next month
10% duties on Chinese goods already implemented
This raises the question: Does Trump want interest rates lowered to offset the negative impact of tariffs on the economy?
