Ahead of US Fed policy, Donald Trump fires fresh salvo at Jerome Powell; calls him ‘stupid’ for not cutting rates
Ahead of the US Federal Reserve’s policy decision later today, US President Donald Trump has fired a fresh salvo at the American central bank. The US President has called Federal Reserve chairman Jerome Powell ‘stupid’ for not cutting rates. This is not the first time that Trump has targeted the US Fed chairman.Last week, Donald Trump had posted on social media platform Truth Social, ““CPI JUST OUT. GREAT NUMBERS! FED SHOULD LOWER ONE FULL POINT. WOULD PAY MUCH LESS INTEREST ON DEBT COMING DUE. SO IMPORTANT!!!”.The Federal Reserve is widely anticipated to maintain current interest rates on Wednesday whilst its officials evaluate indicators of economic slowdown and inflation risks stemming from US import duties and the intensifying Middle East situation.Federal Reserve officials have indicated their desire for greater certainty regarding the economy’s direction towards either increased inflation or reduced growth before providing additional interest rate guidance, yet the possibility of both price increases and employment reduction continues to exist.The Fed, having established its reference interest rate between 4.25%-4.50% in December, has observed increasing uncertainty in economic prospects, particularly following Donald Trump’s return to office in January and his subsequent transformation of US trade strategy through the introduction of substantial reciprocal tariffs.Although implementation of the tariffs has been postponed, the matter remains unresolved and continues to be monitored by US central bank officials.Petroleum prices have increased following Israel’s strike on Iran and the ensuing missile exchanges between these regional adversaries, whilst indicators regarding employment, retail performance and other US economic metrics suggest a potential decline in growth.Despite Trump’s implementation of a 10 per cent tariff on most US trading partners and higher duties on steel, aluminium and automobile imports in recent months, there hasn’t been a significant increase in prices yet.This limited price impact can be attributed to Trump’s decisions to delay or withdraw some of his most severe tariff measures, whilst businesses have managed costs by utilising their existing stock rather than immediately raising prices for consumers.The consumer price index showed a modest increase to 2.4 per cent year-on-year in May from 2.3 per cent in April, demonstrating the current minimal impact of these trade levies.However, economic analysts anticipate that it will take several months before the effects of tariffs become evident in consumer prices, and the Fed is taking a measured approach towards interest rate modifications.
