Trump calls for lowering interest rates as Powell heads to Hill

WASHINGTON – US President Donald Trump called for lower interest rates, seeking to raise pressure on the Federal Reserve as he moves to implement a second-term economic agenda high on tariffs and expanding tax breaks.

“Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs,” Mr Trump said in a Feb 12 post on social media.

The President’s comments come ahead of testimony from Fed chairman Jerome Powell before the House Financial Services Committee on Feb 12. 

The central bank chief told senators Feb 11 there is no need to rush to adjust interest rates, a further signal that the Fed will be patient before lower borrowing costs again. The Federal Open Market Committee lowered rates at each of its last three meetings in 2024, but policymakers held the bank’s key policy rate steady in January.

Mr Powell has repeatedly declined to comment on how the Fed would respond to the President’s policy changes, emphasising that it depends on what is actually enacted and how the proposals interact to affect the economy.

Mr Trump’s comments mark a shift from remarks earlier this month, when he indicated that the Federal Reserve had made the correct decision, saying that “holding the rates at this point was the right thing to do”.

While presidents traditionally refrain from commenting on the bank’s policymaking, Mr Trump has regularly weighed in on the central bank’s handling of interest rates, frequently jabbing at Mr Powell during his first term in the White House.

In a virtual address to financial, business and political leaders at Davos in January, Mr Trump had said he would demand an immediate drop in interest rates, which he blamed for increasing deficits. During the presidential campaign, Mr Trump told Bloomberg that he should be able to tell Mr Powell how he thinks interest rates should change, and he has suggested that as a businessman he knows the issue well.

Mr Trump’s policy proposals have added uncertainty to the US economic outlook as he ramps up tariffs on imports from China and on steel and aluminium. Mr Trump has also delayed tariffs against Canada and Mexico and has promised to unveil reciprocal trade levies on countries as soon as this week.  

Most mainstream economists say those measures threaten to raise pressure on inflation, a major worry for voters and one which helped propel Mr Trump’s return to the White House. BLOOMBERG