Trump Endorses Fed's Decision to Maintain Interest Rates Unchanged
U.S. President Donald Trump approved the Federal Reserve's decision last week to leave interest rates unchanged, marking a notable shift from his prior demand for immediate easing.
In an exchange with reporters on Sunday, Trump expressed that holding the key borrowing level in a range between 4.25%-4.5% was a correct move for the Fed. "I'm not surprised," he remarked regarding the decision, according to multiple reports. "Holding the rates at this point was the right thing to do."
This statement starkly contrasted with his remarks during a remote address to the World Economic Forum in Davos, Switzerland, on January 23, where he stated he would "demand that interest rates drop immediately."
While the president does not have direct authority over the Fed, he has the power to nominate the chairman and other board members. Current Chair Jerome Powell, a Trump nominee, has frequently been a target of the president's criticism.
Markets do not expect the Fed to lower rates until at least June. During his post-meeting press conference last Wednesday, Powell emphasized that the Fed should not be in a "hurry" to decrease rates further, after previously lowering the fed funds rate by a full percentage point from September to December in 2024.
The Fed's decision-making may become more complex following Trump's announcement on Saturday about imposing aggressive tariffs against Canada, Mexico, and China, the three largest trading partners of the U.S. Economists have raised concerns that these tariffs could increase prices during a period when inflation has begun to show signs of easing.
