Trump Pressures Fed for Rate Cuts, Powell Maintains Policy Hold

US President Donald Trump has called on the Federal Reserve (Fed) to lower interest rates, linking the move to his administration's recently imposed tariffs on imports. His request follows Fed Chair Jerome Powell’s assertion that the central bank has no immediate plans to adjust monetary policy.

In a post on Truth Social, Trump argued that reducing interest rates aligns with the administration’s trade measures. The statement was issued shortly after Powell testified before Congress, where he reaffirmed the Fed’s cautious approach to monetary policy.

“We know that easing policy too quickly or too much could slow inflation progress,” Powell said during his testimony. At its January meeting, the Fed opted to maintain rates between 4.25% and 4.50%, citing stable economic indicators and a slight uptick in inflation.

The US inflation rate has shown signs of slight acceleration, with the Consumer Price Index (CPI) rising 2.6% year-over-year in December 2024, compared to 2.4% in November. Core inflation, which excludes volatile food and energy prices, also increased by 0.3% on a monthly basis.

Despite these gains, inflation remains well below its 2022 peak, when the Fed implemented aggressive rate hikes to combat soaring prices. Powell and other Fed officials have consistently emphasized that while inflation has cooled, premature rate cuts could reignite inflationary pressures, undermining economic stability.

On Monday, the Trump administration imposed 25% tariffs on steel and aluminum imports and hinted at broader trade measures targeting key trading partners. These tariffs are expected to raise costs for US consumers and businesses, potentially adding inflationary pressure.