Minutes after President Donald Trump called on him to cut interest rates, Federal Reserve Chair Jerome Powell warned that the president’s tariffs are likely to raise inflation, escalating tension between the White House and the central bank.
“We face a highly uncertain outlook with elevated risks of both higher unemployment and higher inflation,” Powell said at the Society for Advancing Business Editing and Writing conference in Arlington, Virginia. “While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent.”
Trump’s tariffs announced this week are sharper and higher than many economists anticipated and have resulted in a widespread market sell-off. Economists at JP Morgan ticked up the chances of a global recession to 60% if the tariffs remain, and markets have tumbled — particularly after China issued retaliatory tariffs against the United States.
Trump, who spent some of Friday morning at the Trump International Golf Club in West Palm Beach, called on Powell to cut interest rates soon before the chair spoke, posting on TruthSocial: “This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. He is always ‘late,’ but he could now change his image, and quickly. Energy prices are down, Interest Rates are down, Inflation is down, even eggs are down 69%, and Job are UP, all within two months — A BIG WIN for America. CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!”
Trump has repeatedly asked for the Fed to cut interest rates. In late March, he said “I’d like to see the Fed lower interest rates. That’s just my opinion, because things are coming down. We have inflation under control, tremendous amounts of money will be soon coming in from tariffs, which is about time that we were able to partake.”
But Powell has indicated he doesn’t plan to make an immediate move. “We are well positioned to wait for greater clarity before considering any adjustments to our policy stance,” he said in Virginia on Friday. “It is too soon to say what will be the appropriate path for monetary policy.”
In March, the Fed suggested there could be slightly slower growth and slightly higher inflation coming up; at a press conference, Powell said “a good part of” the inflation projection “[was] coming from tariffs.”
New jobs data released Friday showed the economy added 228,000 jobs in March, a stronger-than-anticipated performance, which could also de-incentivize an immediate rates cut.
Federal Trade Commission Chair Andrew Ferguson indicated the organization will be watching prices in light of the new tariffs.
“President Trump is reorienting our nation’s economy to put Americans first. As we adjust to the new economic order, the FTC will be watching closely to make sure American companies are vigorously competing on prices,” he wrote in a post on X. “These necessary tariffs should not be interpreted as a green light for price fixing or any other unlawful behavior. We will always protect American consumers.”
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Nuha Dolby is a NOTUS reporter and an Allbritton Journalism Institute fellow.