President Donald Trump continues to urge the Federal Reserve to lower interest rates, warning that the current interest rate policy is costing the country billions of dollars. Hours before the FOMC decision on June 18, Trump reiterated his call for rate cuts, arguing that lower rates would reduce debt costs and improve overall economic flexibility.
However, according to a post on X by Watcher Guru, Powell still maintains his target range of 4.25% to 4.50%, citing persistent inflation risks related to Trump's tariffs.
Trump's Call for Interest Rate Cuts Grows Stronger
Speaking at a Flagpole facility at the White House, Trump emphasized that the Federal Reserve should lower interest rates by at least two percentage points. He stated that such a cut would allow the government to buy debt at a lower cost and significantly save on short-term obligations. Trump claimed that inflation is now low enough to justify immediate action and criticized the leadership of Fed Chairman Jerome Powell, calling him unfit for the role.
Despite expressing skepticism about any interest rate changes in the June meeting, Trump continues to criticize on Truth Social. He accused Powell of harming the economy and stated that the Fed's refusal to cut interest rates is damaging the competitiveness of the U.S. compared to Europe, which has seen ten interest rate cuts.
Powell Responds Cautiously Amid Concerns Over Tariffs
After the FOMC announcement, Chairman Powell defended the decision to keep interest rates unchanged. He pointed to a recovering labor market and stable economic growth. However, he highlighted new concerns about inflation stemming from increased tariffs, including those tariffs reinstated under Trump’s trade policy.
Powell explained that although inflation has decreased from its 2023 levels, it remains above the Fed's 2% target. According to Powell, the labor market shows no signs of overheating, but higher trade costs are putting pressure on prices in the short term. He confirmed that the Fed is being cautious and closely monitoring global impacts.
Powell also mentioned that interest rate cuts could still happen by the end of the year if inflation continues to decline. While the Fed is currently holding steady, investors are still anticipating the possibility of rate cuts by year-end. With four more upcoming FOMC meetings, future decisions may depend on inflation data and broader economic signals.