President says Fed chair is ‘playing politics’ – but Powell appears to rule out immediate rate cut
Federal Reserve chair Jerome Powell said Friday that global tariffs are likely to stoke inflation and weigh against economic growth, appearing to rule out an imminent interest rate cut even as President Trump demanded he bring rates lower.
Powell said at an Arlington, Virginia event that downside economic risks are rising as a result of Trump’s barrage of tariffs on trading partners announced Wednesday, which saw the US slap a 10% “baseline” charge on all imports.
“While uncertainty remains elevated, it is now becoming clear that the tariff increases will be significantly larger than expected,” Powell said. “The same is likely to be true of the economic effects, which will include higher inflation and slower growth.”
Powell said the tariffs would generate “at least a temporary rise” in inflation – and that the impact was likely to be persistent.
But Trump, who doubled down on the tariff policies Friday despite tumbling financial markets and a mass selloff on Wall Street, posted on Truth Social prior to Powell’s speech that the Fed should begin lowering rates.
“This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates,” Trump wrote. “He is always ‘late,’ but he could now change his image, and quickly… CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!”
Trump appointed Powell as Fed chair in 2017 but has clashed numerous times with the veteran decisionmaker and attacked the central bank for failing to lower interest rates in January.
Then, Powell said the Fed was not “in a hurry” to cut rates – but Trump accused it of “[failing] to stop the problem they created with inflation.”
The president also urged Powell to “do the right thing” and lower rates in March ahead of the tariff regime’s imposition.
Powell appears to rule out immediate rate reduction
Money markets now expect the Fed to cut by a total of 100 basis points in the remainder of 2025 after Trump’s tariffs roiled global markets this week. Still, Powell pushed back against the idea of immediate cuts, telling reporters in Arlington the central bank was “well positioned to wait for greater clarity” before slashing rates.
Following Trump's global tariffs, markets anticipate the Fed will cut rates by 100 basis points in 2025 to counter recession fears.https://t.co/vjnxl4B2k0
— Mortgage Professional America Magazine (@MPAMagazineUS) April 4, 2025
The Fed’s next decision is scheduled to take place on May 6-7, with further announcements to come in June, July, September, October, and December.
Trump faced pressure to pare back his tariff barrage after global markets nosedived this week, wiping trillions of dollars from stock markets – but the president took to social media to dismiss that idea and said he would “never” back down on what’s become a signature policy.
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