Trump says lower interest rates would go hand in hand with tariffs
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Federal Reserve chair Jerome Powell says a strong US economy allows the Fed to keep its short-term rate for now.
PHOTO: AFP
WASHINGTON – President Donald Trump on Feb 12 said interest rates should be lowered and that would go “hand in hand” with his upcoming tariffs, despite economists’ expectations that tariffs would fuel inflation and postpone rate cuts.
Mr Trump substantially raised tariffs on steel and aluminium imports on Feb 10 to a flat 25 per cent “without exceptions or exemptions”, in a move he hopes will aid struggling industries in the United States, but which also risks sparking a trade war.
“Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!!!” Mr Trump wrote in a post on his Truth Social platform.
However, Federal Reserve chair Jerome Powell told lawmakers on Feb 12 the Fed was in no rush to cut its short-term interest rate again given an economy that is strong overall.
Mr Powell was set to testify before the House financial services committee on Feb 12 as Trump’s trade advisers finalise plans for additional reciprocal tariffs.
A Reuters poll showed the Federal Reserve was expected to wait until the next quarter before cutting rates again.
Tariffs could fuel inflation and postpone rate cuts.
Data earlier on Feb 12 showed consumer prices increased more than expected in January.
Economists have raised their inflation forecasts since Mr Trump was elected, based on concerns his policies, particularly on tariffs, could reignite price pressures in the economy. REUTERS
