Trump Urges Fed Rate Cuts to Ease Economy’s Tariff Transition

‘The president has every right to criticize the decision,’ press secretary Karoline Leavitt said to reporters.

President Donald Trump delivers remarks on the jobs report from the Oval Office at the White House on March 7, 2025. Anna Moneymaker/Getty Images

President Donald Trump wants the Federal Reserve to cut interest rates to help ease the U.S. economy’s tariff-driven transition.

Trump has been largely silent about monetary policy for the last several weeks. After the central bank’s March policy meeting, however, the president weighed in on the Federal Reserve’s decision, urging Chair Jerome Powell and his colleagues to lower rates.

“The Fed would be much better off cutting rates as U.S. Tariffs start to transition (ease!) their way into the economy,” Trump wrote in a Truth Social post on March 19. “Do the right thing. April 2nd is Liberation Day in America!”

The administration plans to introduce reciprocal tariffs on all U.S. trade partners on April 2.

White House press secretary Karoline Leavitt reiterated the president’s message, telling reporters that Trump and the American people believe in low interest rates.

“The president has every right to criticize the decision, and he’s made it very clear that he believes in lower interest rates are going to help this country boom, and this administration is working on lowering the rate of inflation caused by the previous administration,” Leavitt said.

“Every day, inflation is cooling.”

The Federal Reserve kept interest rates on hold for the second consecutive meeting on March 19. Powell and other U.S. central bank policymakers have expressed support for leaving rates alone until there is more progress on inflation and greater clarity surrounding tariffs.

Powell said he expects that tariffs could “delay” further progress on inflation this year.

In the updated Summary of Economic Projections, Federal Reserve officials revised their inflation forecasts for 2025 higher and adjusted growth prospects slightly lower. Powell stated at his post-meeting press conference that tariffs could bolster short-term inflation before receding in the long run, using the word “transitory” to describe potential tariff-fueled price pressures.

One-year consumer inflation expectations have spiked over the last two months, but long-term market projections have been well anchored.

Ultimately, however, the Federal Reserve is not in a hurry to implement another rate cut and will wait to determine how trade policy changes will play out in the coming months.

“I mean, it’s just really hard to know how this is going to work out,” Powell told reporters.

All Quiet on the Fed Front

Shortly after returning to the White House in January, Trump said he would “demand that interest rates drop immediately,” a threat that did not materialize. He also encouraged other central banks worldwide to begin cutting interest rates to resuscitate economic growth.

Since then, the president has said little about the Federal Reserve, taking a more hands-off approach that contrasts with his first term.

Trump frequently lambasted Powell and the U.S. central bank on social media and in television interviews, demanding that the institution cut interest rates.

“The USA should always be paying the lowest rate. No Inflation!” Trump wrote on social media platform X in 2019. He said Powell and the Federal Reserve should “do what other countries are already doing.”

Federal Reserve Chairman Jerome Powell after testifying before the Senate Committee on Banking, Housing, and Urban Affairs on Capitol Hill in Washington on Feb. 11, 2025. Madalina Vasiliu/The Epoch Times

By the end of 2019, the Fed completed three quarter-point rate cuts to keep the economic expansion going amid slowing global trade flows.

During the 2024 campaign trail, Trump suggested that he could terminate Powell. In addition, financier Scott Bessent, now the Treasury Secretary, proposed installing a shadow Federal Reserve chair to which markets would pay more attention.

Trump and his team have been more cordial in recent months, clarifying that they would allow Powell to finish his term in 2026.

According to Bessent, the administration is more focused on reducing the benchmark 10-year Treasury yield.

“The president wants lower rates,” Bessent told Fox Business host Larry Kudlow in February. “He and I are focused on the 10-year Treasury and what is the yield of that.”

Following the Federal Reserve’s super-sized half-point rate cut in September 2024, the 10-year yield shot up more than 100 basis points. However, the yield has been sinking since peaking above 4.8 percent in mid-January, tumbling about 60 basis points to around 4.23 percent.

Fed Still Sees Rate Cuts

And while the Federal Reserve chose to sit on its hands for the second straight meeting, policymakers still anticipate two rate cuts this year.

According to the Summary of Economic Projections, the median policy rate could slide to 3.9 percent by the year’s end, down from the current range of 4.25 and 4.5 percent. This implies the Fed will initiate two quarter-point reductions to the benchmark federal funds rate in 2025.

“We’re not going to be in any hurry to move,” Powell told reporters. “Our current policy stance is well-positioned to deal with the risks and uncertainties we face. The right thing to do is to wait here for greater clarity about what the economy is doing.”

However, the Fed head stated that participants were unwilling to change their rate forecasts because of uncertainty about the broader economic landscape.

Based on CME FedWatch Tool data, markets think the Fed’s next policy action will be a quarter-point interest rate cut at the June Federal Open Market Committee meeting.

The next two-day policy meeting will take place on May 6 and 7.