President Donald Trump on Friday urged Federal Reserve Chairman Jerome Powell to cut interest rates, arguing that current economic conditions make it the “perfect time” for monetary easing.
JUST IN: 🇺🇸 President Trump said “This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates.”
“CUT INTEREST RATES, JEROME” pic.twitter.com/tEsBpH3YdD
— Bitcoin Magazine (@BitcoinMagazine) April 4, 2025
“This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates,” Trump posted on Truth Social. “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 Jobs are UP, all within two months – A BIG WIN for America. CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!”
Trump’s comments came as global equity markets experienced a sharp sell-off following his administration’s announcement of new tariff policies on Wednesday. China responded on Friday with its own countermeasures, including 34% tariffs on all US goods, export restrictions on key minerals, and limits on American agricultural imports.
Powell Warns of Economic Risks
Just hours before Trump’s post, Powell expressed concerns about the economic impact of these new trade policies while speaking at a conference for business journalists in Arlington, Virginia. The Fed Chair warned that the tariffs were “significantly larger than expected” and could lead to both higher inflation and slower economic growth.
“We face a highly uncertain outlook with elevated risks of both higher unemployment and higher inflation,” Powell said, adding that the Fed is “well positioned to wait for greater clarity before considering any adjustments to our policy stance.”
Powell noted that while tariffs would likely generate “at least a temporary rise in inflation,” there’s a possibility “that the effects could be more persistent.” He emphasized the Fed’s obligation to keep inflation expectations well anchored and “to make certain that a one-time increase in the price level does not become an ongoing inflation problem.”
Also Read: How the Latest Fed Decision Could Impact Crypto Prices in 2025
Market Reaction
US stock indexes have dropped about 10% since Trump’s tariff announcement on Wednesday, with the Dow Jones Industrial Average falling more than 2,000 points on Friday alone.
Market expectations for Fed policy have shifted dramatically in response to these developments. According to the CME’s FedWatch tool, traders now anticipate at least four interest rate cuts of 0.25 percentage point from the central bank this year, up from the two cuts projected by Fed officials at their March meeting.
Treasury yields have also fallen sharply, with the 10-year U.S. Treasury yield dropping below 4%, which often happens when investors are concerned about a potential recession.
Economic Context
Trump’s call for rate cuts comes on the heels of the March jobs report, which showed the US economy added 228,000 jobs, exceeding expectations. The unemployment rate ticked up slightly to 4.2%.
History of Tension
This is not the first time Trump has publicly pressured the Federal Reserve. During his first term, he frequently commented on central bank policy and was often at odds with Powell, leading to speculation that he might attempt to remove the Fed chair before his term ends.
Trump said in December that he does not intend to fire Powell, and the Fed chair has said he doesn’t think the president is legally allowed to do so.
The Federal Reserve’s next policy meeting is scheduled for early May, with the benchmark federal funds rate currently at a range of 4.25% to 4.5%. Powell has indicated it’s “too soon to say what will be the appropriate path for monetary policy” given the uncertain economic outlook.
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