Trump urges Fed to cut interest rates in response to tariffs

WASHINGTON, March 19 (Xinhua) -- U.S. President Donald Trump on Wednesday urged the Federal Reserve to cut interest rates as his tariff policies would impact the U.S. economy.

"The Fed would be MUCH better off CUTTING RATES as U.S.Tariffs start to transition (ease!) their way into the economy," Trump said in a post on Truth Social.

Given higher inflation expectations, some observers believe that the central bank might not be able to cut rates anytime soon, and may choose to maintain current rates until there is greater clarity on inflation trends and overall economic conditions.

Trump's remarks came as the Fed left the target range for the federal funds rate unchanged at 4.25 percent to 4.5 percent, amid rising inflation concerns due to the administration's tariff policies.

When asked how much of the expected higher inflation is due to tariffs, Fed Chair Jerome Powell said at a press conference Wednesday afternoon, "a good part of it," while noting that it would be "very difficult" to have a precise assessment of how much of inflation is coming from tariffs.

"Looking ahead, the new Administration is in the process of implementing significant policy changes in four distinct areas: trade, immigration, fiscal policy, and regulation. It is the net effect of these policy changes that will matter for the economy and for the path of monetary policy," Powell told reporters.

"While there have been recent developments in some of these areas, especially trade policy, uncertainty around the changes and their effects around the economic outlook is high," said the Fed chief.

According to the Fed's latest quarterly summary of economic projections released Wednesday, the median projection for personal consumption expenditures (PCE) inflation among Fed officials is 2.7 percent by year-end, up from 2.5 percent in the December projection.

Median projection for core PCE inflation among Fed officials is 2.8 percent by year-end, up from 2.5 percent in the December projection. Fed's target inflation rate is 2 percent.

During his first term, Trump frequently urged the Fed to cut interest rates. He believed that lowering interest rates could stimulate economic growth, particularly in the face of trade wars and global economic uncertainty. Some saw this as a challenge to the Fed's independence. ■