U.S. President Donald Trump has once again changed his stance regarding the Federal Reserve, indicating in a social media update that interest rates need to decrease.
“Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!!! Lets Rock and Roll, America!!!” the president stated in a morning post on Truth Social.
Market pricing indicates that the Fed will likely remain on hold until June or July and may not cut rates again for the remainder of the year. Some economists, including those at Bank of America, believe that the central bank will not ease its stance at all this year after already lowering the benchmark overnight borrowing rate by a full percentage point in 2024.
About thirty minutes after Trump’s post, the Bureau of Labor Statistics announced that consumer prices had risen more than anticipated in January. The 3 percent twelve-month inflation rate—3.3 percent when excluding food and energy—reinforced market expectations that the Fed will remain steady during its March meeting and could wait until at least September before considering another cut.
Comments follow recent statements by Fed Chair Jerome Powell
These remarks come just a day after Fed Chair Jerome Powell noted that policymakers do not need to be “in a hurry” to reduce rates while they monitor the progress on inflation. Other officials have mentioned that they are also assessing the potential effects that tariffs might have on prices, though Powell has refrained from commenting directly on this matter.
In his appearance before the House Financial Services Committee on Wednesday, Powell again did not directly address Trump’s call for lower rates. He said, “people can be confident that we’ll continue to keep our heads down, do our work, make our decisions based on what’s happening in the economy.”
When asked if “statements by elected officials are not among the things that cause you to act one way or the other,” Powell responded, “That’s correct.”
Read more: Powell says Fed does “not need to be in a hurry” following rate cut pause, Trump responds
A shifting narrative from White House regarding monetary policy
Trump’s post also reflects a changing narrative from the White House concerning monetary policy. Shortly after assuming office, Trump insisted that interest rates should be lowered “immediately,” despite having no direct control over the Fed. Just days later, he acknowledged that the central bank made the right choice in maintaining steady rates during its late January meeting.
In later remarks, Treasury Secretary Scott Bessent indicated that the administration was more focused on reducing the 10-year Treasury yield than on the short-term fed funds rate.
However, Trump’s comment on Wednesday suggests a return to applying pressure on the central bank to adopt a more accommodating policy.
