Trump clashes with Fed over rate cuts

The Federal Reserve is expected to hold interest rates steady today, resisting mounting pressure from President Donald Trump.

(CNN)- The Federal Reserve is expected to hold interest rates steady today, resisting mounting pressure from President Donald Trump, who is calling for cuts—or the resignation of Fed Chair Jerome Powell.

Trump argues that lower rates would make borrowing more affordable for Americans and boost economic growth. But economists caution that rate cuts could stoke inflation, which Powell has already flagged as a concern—particularly in light of new tariffs. The Yale Budget Lab predicts that Trump’s latest round of tariffs could shrink real GDP by half a percentage point this year.
“These losses mean about $2,700 in increased prices for consumers,” said Natasha Sarin, an economist and Yale professor. “Those losses mean fewer jobs in this country and less growth in this country.”

Despite those numbers, Trump is continuing his push for lower rates. His campaign included a visit to Federal Reserve headquarters last Thursday, during which he criticized the cost of ongoing renovations and placed blame on Powell. Trump’s actions have sparked concern among analysts and investors, who warn against politicizing the Fed’s decision-making process.

“If the numbers don’t give him the ammo to go out and cut wildly the way Trump does it, it would be hugely reckless,” said Roben Farzad, host of Full Disclosure. “The markets would immediately come back and say, ‘Whoa… we’re seeing the full politicization of the Fed on the largest economy on the planet.’”

Though Trump has said he probably won’t attempt to fire Powell, he has made it clear he believes the Fed chair is failing in his role. Powell’s term ends in May.