Traders work as a screen broadcasts a news conference by US Federal Reserve Chair Jerome Powell, on the floor of the New York Stock Exchange in New York City on Wednesday. BRENDAN MCDERMID/REUTERS
WASHINGTON — US President Donald Trump urged the Federal Reserve on Wednesday to cut interest rates to help offset the effects of his tariffs, renewing his vocal disagreement with the central bank's decision-making.
"Do the right thing," Trump demanded in a post on his Truth Social site, hours after the Fed decided to hold rates steady, while reducing its growth forecast and hiking its inflation outlook.
The Federal Reserve has penciled in two rate cuts this year, but chairman Jerome Powell noted that "uncertainty today is unusually elevated" and that inflation is ticking up.
The Trump administration's initial policies, including extensive import tariffs, appear to have tilted the US economy toward slower growth and at least temporarily higher inflation, Powell said on Wednesday.
With overall sentiment sliding due to policy "turmoil", prices are projected to rise faster than expected perhaps largely because of Trump's plans to levy duties on imports from US trading partners, Powell said after the Fed announced it had held its benchmark overnight rate steady in the 4.25-4.5 percent range.
Fed policymakers still expect the central bank to deliver two quarter-percentage-point rate cuts by the end of this year, matching their projection in December. That's largely due to weakened economic growth offsetting higher inflation, and what Powell called the "inertia" of not knowing what else to do given the muddled outlook.
"We understand that sentiment is quite negative at this time, and that probably has to do with turmoil at the beginning of an administration that's making big changes," Powell said.
Many economists have warned that the tariffs — which are being met with trade retaliation by some countries — threaten to possibly tip the US economy and others into recession.
Trump has admitted that the economy may suffer "a little disturbance" as his planned levies take hold, but that the United States is otherwise on the cusp of a "golden age".
In Wednesday's message, he again stressed that April 2, when he plans to enact "reciprocal tariffs" designed to reset global trade, would be a "liberation day" for the US economy.
But he wants US interest rates to come down as well.
"The Fed would be much better off cutting rates as US tariffs start to transition (ease!) their way into the economy," he posted.
During his first term, Trump repeatedly expressed disagreement with the Fed's rate decisions, urging them to be lowered to boost the economy.
The Fed cut its benchmark interest rate by a full percentage point last year, but has kept rates on hold this year as it waits for further evidence that inflation will continue to fall, and, more recently, for more clarity about the impact of Trump's policies.
"We're not going to be in any hurry to move," Powell said. "The right thing to do is to wait here for greater clarity about what the economy is doing."
Agencies Via Xinhua
