I duties imposed by Donald Trump will do increase inflation, unemployment rises e will slow down US growth. For this reason the Fed will not cut rates of interest until it has a clearer picture of their impact. The head of the US central bank said this bluntly, Jerome Powell during a public speech delivered before economic journalists in Arlington, Virginia. Words that seem to foretell a very tough fight with President Trump, who just minutes earlier had tried to put pressure on the central bank: “This would be the perfect time to cut rates for Fed Chairman Jerome Powell. He’s always ‘late,’” he wrote in a post on Truth.
Powell's words
“While uncertainty remains high, it is becoming clear that the tariff increases will be significantly higher than expected”, explained Powell, according to whom it is therefore “likely that the same is true for the economic effects, which will include higher inflation and slower growth”. “We agree to expect have greater clarity before considering any adjustments to our policy stance.” “It is too early to say what the appropriate path for monetary policy will be,” insisted Powell, who then tried to reassure: the economy “is currently strong” and growth “solid.” Back in March, the Fed had left interest rates unchanged at 4,25%-4,50%, while taking into account the problems with trade policy.
“We are faced with very uncertain prospects”, reiterated the head of the Federal Reserve. There is “the risk of higher unemployment and higher inflation”, a situation “difficult for a central bank”, he added. “If the Fed detects a tension between the two objectives”, that is, maximum employment and price stability, “we will have to evaluate how much it will be necessary to "act" on each, “and it’s a difficult decision,” he reiterated. “At the moment, the Fed does not see a tension between the two objectives, we are not in the 70s,” he added.
“Our obligation is to keep long-term inflation expectations well anchored and to ensure that a one-off increase in the price level does not become a continuing inflation problem,” Powell continued. “We are well positioned to wait for more clarity before considering any adjustments to our policy stance. It is too early to say what the appropriate path for monetary policy will be.”
Trump on the attack: "Perfect time to cut rates"
Minutes before Powell spoke, President Donald Trump said the exact opposite. In his opinion, rates should be cut immediately. An opinion that seems to foreshadow a Tough clash between Fed and White House, after the numerous tensions already seen in the recent past.
"This it would be the perfect time to cut rates for Fed Chairman Jerome Powell. He's always 'late' but he could change his image quickly,” wrote US President Donald Trump on Truth minutes before Powell spoke. “Energy prices are down, inflation is down, with egg prices down 69%. Jobs are up. Jerome, cut interest rates and stop playing politics,” Trump added.
