Fed successor candidate Kevin Warsh criticizes Powell: Tariffs won't lead to inflation, should cut rates significantly
Recently, the direction of the Federal Reserve's monetary policy has drawn high attention from investors. On Monday local time, former Federal Reserve official and a popular candidate to succeed Powell, Kevin Warsh, stated that the Federal Reserve should cut rates to a lower level, asserting that "tariffs won't lead to inflation" and that its "poor economic policies" are suppressing economic growth. He also mentioned that the Federal Reserve's decision to keep rates unchanged has frustrated Trump, and he expressed sympathy for this, adding that the Federal Reserve needs "institutional reform".
Previously, Fed Chairman Powell remarked that if it weren't for Trump's tariff policies, the Federal Reserve might have further cut rates this year. Due to the impact of tariffs, U.S. inflation expectations have risen, and the Federal Reserve is still in a wait-and-see mode, with the decision to cut rates in July dependent on economic data. Currently, there is disagreement in the market regarding expectations for a Fed rate cut; Goldman Sachs anticipates a cut in September, while futures traders have abandoned bets on a July cut, and expectations for a September cut are also beginning to waver.
Additionally, Trump has publicly criticized Powell multiple times, demanding that he cut rates significantly to 1%, accusing him of refusing to cut rates which has led to significant losses for the U.S. White House trade advisor Peter Navarro also criticized Powell for delaying a rate cut, marking his third major policy blunder in six years, and called for an immediate rate cut at the July meeting.