The Marriner S. Eccles Federal Reserve building in Washington, D.C., on July 23, 2021. Photographer: Stefani Reynolds/Bloomberg.
President Donald Trump cited a softer-than-expected inflation report to again pressure Federal Reserve Chair Jerome Powell to lower interest rates.
“No Inflation, and Prices of Gasoline, Energy, Groceries, and practically everything else, are DOWN!!!” Trump wrote in a social media post. “THE FED must lower the RATE, like Europe and China have done. What is wrong with Too Late Powell?” Trump added that the Fed’s strategy was “not fair to America, which is ready to blossom.” He continued, “Just let it all happen, it will be a beautiful thing!”
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The president’s latest call for lower rates came after a report yesterday showed the consumer price index rose 0.2 percent in April, coming in below estimates for a third straight month. Prices of most goods expected to be affected by tariffs advanced by less than economists had feared, while weakness in services categories like airfares, hotels, and recreation—a potential sign of softer demand for nonessentials—also weighed on the numbers. Forecasters generally expect tariff-driven price increases to become more pronounced in the months ahead, which they think will keep the central bank hesitant to cut rates. Investors are currently betting the Fed will stay on hold at its next two policy meetings—in June and July—before making reductions in September and December, according to futures.
Trump is downplaying fears of price hikes and shortages driven by his tariff regime. The administration has applied a 10 percent global tariff on nearly every country, while applying or threatening separate duties on key sectors—measures that have roiled markets and spurred worries about higher costs for U.S. consumers and an economic slowdown.
April’s data are far from conclusive. Many of the imported goods that were on U.S. shelves last month arrived in the country before the new tariffs came into effect. That said, some U.S. businesses are absorbing the tariff hit themselves in an effort to avoid a pullback in demand when consumers are already feeling concerned about the economy. “Our forecast anticipates a spike in prices by June and July from the tariffs,” Michael Hanson, an economist at JPMorgan Chase & Co., said in a note after the release. “Economic analysts and Fed officials alike are watching and waiting to see the extent of the upward pressure.”
Still, grocery prices fell by the most since 2020, which was welcome news for cash-strapped Americans. The decline was driven by the biggest drop in egg prices in four decades, offering some reprieve after a surge in bird flu cases pushed prices to record highs earlier this year. The prices of other important staples—including bacon, chicken, and rice—also fell.
Trump has regularly touted the price of gasoline and other goods in downplaying inflation risks, even while acknowledging that his tariffs might force consumers to pare back demand for some products. His higher so-called “reciprocal tariffs” on about five dozen countries and the European Union, are paused at 10 percent until July but could rise again then. Trump announced higher tariffs in April and then paused them, giving countries time to negotiate deals with his administration.
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