Trump: Fed Should Cut Rates

President Donald Trump says the Federal Reserve would be better off cutting rates "as U.S. tariffs start to transition (ease!) their way into the economy."

His admonition came Wednesday, after the Fed kept interest rates unchanged while the central bank and investors continue to assess how Trump's tariff policies might affect economic growth.

The Fed also forecast slower economic growth and higher inflation. There was substantial disagreement among policymakers about the appropriate path of policy, pointing to uncertainty among members over how to handle the effects of the Trump administration's policies.

The president, though, displayed no hesitation on what the Fed should do.

"The Fed would be MUCH better off CUTTING RATES as U.S.Tariffs start to transition (ease!) their way into the economy. Do the right thing. April 2nd is Liberation Day in America!!!" Trump posted Wednesday night on Truth Social.

The Trump administration's initial policies, including extensive import tariffs, appear to have tilted the U.S. economy toward slower growth and at least temporarily higher inflation, Federal Reserve Chair Jerome Powell said.

Powell told a news conference that it was too soon to determine whether the Fed needed to look through the inflationary impact from higher tariffs. He said it would be challenging to determine how much of any goods price inflation is attributable to tariffs and how much is due to other factors.

But he noted that business and household surveys were turning up more and more concerns about inflation and short-term inflation expectations, although longer-term inflation expectations are "mostly well-anchored."

"I do think with the arrival of the tariff inflation, further progress may be delayed" in reaching the Fed's 2% annual inflation rate, Powell said. The Fed's quarterly summary of economic projections "doesn't really show further downward progress on inflation this year, and that's really due to the tariffs coming in."

Since taking office, Trump has moved to radically redraw global trade flows, already imposing a 20% increase in import duties on goods from China and 25% tariffs on goods from Canada and Mexico that do not comply with U.S.-Mexico-Canada Agreement trade rules.

He has fully restored 25% tariffs on global steel and aluminum imports and on April 2 will implement "reciprocal tariffs" to offset the import taxes and nontariff barriers of all trading partner countries.

Reuters contributed to this story.