The Federal Reserve (Fed) announced that it would maintain the federal funds rate at its current level, a move that immediately drew the disapproval of U.S. President Trump. On March 19, he publicly urged the Fed to cut rates, acknowledging that U.S. tariff policies had affected the economy, and demanded that the Fed "do the right thing." Trump stated on social media that the Fed should cut rates because the impact of tariff measures is gradually filtering into the economy.
Trump's statement has garnered attention from analysts. In recent years, the U.S. government has frequently imposed tariffs on trading partners, which has not only drawn criticism from abroad but has also prompted retaliation. These measures have pressured U.S. economic growth, and Trump's call for the Fed to use monetary policy to offset the impact of tariff measures has become more urgent. In fact, during his first term, Trump publicly criticized the Fed and its chairman, Powell, urging rate cuts multiple times, a move seen as challenging the Fed's independence.
That day, the Fed concluded its two-day monetary policy meeting and announced that it would maintain the federal funds rate in the target range of 4.25% to 4.50%. In a press conference, Fed Chairman Powell noted that recent U.S. inflation levels have begun to rise, partly due to tariff policies. He also stated that inflationary pressures might continue to manifest later this year. Powell mentioned that evaluating the specific impact of tariff policy on inflation is very difficult, but he clearly indicated that tariff policy is a significant factor in rising inflation.
The Fed also released its latest economic outlook, showing that the median inflation forecast for this year is 2.7%, higher than the 2.5% forecast in December. The core inflation forecast, excluding food and energy prices, is 2.8%, also higher than December's 2.5%. The Fed pointed out that the uncertainty of the U.S. economic outlook is increasing, especially given major policy changes in trade, immigration, fiscal policy, and government regulations, which will have a significant impact on the economy.
Some analysts believe there is a clear conflict between Trump's tariff policies and the Fed's monetary policy, and that the Fed is under immense pressure from Trump.
