Trump Urges Major Rate Cuts Ahead of Powell’s Testimony, Ties Fed Policy to Inflation and Tariffs
Former U.S. President Donald Trump has renewed his call for significant interest rate cuts, suggesting that rates should be lowered by two to three percentage points. His comments come just before Federal Reserve Chair Jerome Powell is scheduled to testify before Congress. Trump made his remarks via a post on Truth Social, arguing that the current rates are too high and asserting that if economic conditions worsen later, rates can be increased again.
In the same post, Trump criticized Powell for “refusing to lower the Rate” and implied that Powell would need to justify his stance during his upcoming congressional testimony. The Fed has faced ongoing pressure from Trump to loosen monetary policy, and his comments have stirred speculation about how future leadership could shift the central bank’s direction once Powell’s term ends in May 2026.
Powell’s testimony is scheduled for Tuesday and Wednesday and comes amid increased market attention on Federal Reserve policy. Just last week, the Fed opted to keep interest rates steady in the 4.25% to 4.50% range. The central bank has forecast two potential rate cuts by the end of 2025, though Powell also warned of lingering inflation risks.
One key inflationary factor Powell highlighted is the Trump administration’s planned import tariffs, which are expected to increase the cost of consumer goods. These planned tariffs are part of Trump’s broader trade policy strategy, raising concerns that they could complicate the Fed’s path to controlling inflation.
Trump’s remarks on monetary policy came shortly after he announced a ceasefire agreement between Israel and Iran, underlining a day filled with high-profile political developments. His public pressure on the Fed, combined with active foreign policy announcements, signals a growing engagement in national affairs as he continues to shape the political and economic narrative.
Source: Reuters