Investing.com-- U.S. President Donald Trump said on Wednesday the Federal Reserve should cut interest rates as the impact of his trade tariffs are baked into the economy, while reiterating that more tariffs will come in early-April.
Trump’s comment came just hours after the Fed left rates unchanged and made no changes to its expectations for rate cuts this year.
“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 said in a post on Truth.Social.
He added that April 2- the date when his plans for increased trade tariffs are set to be revealed- is “liberation day” for the country.
Trump has repeatedly called on the central bank to further cut interest rates, given that lower rates are likely to further his agenda of improving U.S. economic growth.
But the Fed has been reluctant to commit to any further easing amid growing signs of sticky U.S. inflation. The central bank on Wednesday hiked its inflation outlook for 2025, while trimming its growth expectations.
Policymakers, including Chair Jerome Powell, have expressed uncertainty over the impact of Trump’s policies on the economy. Trump’s tariffs will be borne by local importers, who could then pass on the costs to consumers and drive up inflation.
The President is set to unveil his plans for reciprocal tariffs against major U.S. trading partners on April 2. In the two months since his inauguration, Trump has imposed increased tariffs on China, but has flip-flopped in his plans to impose tariffs against Canada and Mexico, given their close ties to the U.S. economy.
Trump’s comments on the Fed have also factored into some concerns over the central bank’s independence from his administration, especially after Trump fired two democratic commissioners from the Federal Trade Commission earlier this week.
Still, Powell has signaled that the Fed remains independent, and that he will serve his tenure as Chair until May 2026. Powell was appointed as Fed Chair by Trump during his first term.