Latest news with #Rates
Yahoo
11 hours ago
- Business
- Yahoo
Federal Reserve issues rare statement asserting independence amid Trump pressure
The Federal Reserve issued a rare, strongly worded statement on Thursday after chair Jerome Powell spoke with Donald Trump at the White House on Thursday morning, holding firm on the central bank's independence amid pressure from Trump to lower interest rates. The three-paragraph statement emphasized the Fed's independent, non-partisan role in setting monetary policy based on economic data. 'Chair Powell did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook,' the statement read. Powell told Trump that he and other Fed officials 'will set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective, and non-political analysis', according to the statement. That the Fed, which tends to be extremely reserved with public statements, issued the brief memo shows that officials are aware of Trump's pressure campaign and are standing firm on the Fed's independence. At Thursday's White House press briefing, press secretary Karoline Leavitt said that the Fed's statement is 'correct' but that Trump 'did say that the Fed chair is making a mistake by not lowering rates'. Related: 'Fiscally irresponsible': Trump's 'big, beautiful bill' benefits the rich at the expense of the poor Historically, presidents show deference to the Fed, respecting the central bank's independence. But over the last few months, Trump has tried to publicly pressure Powell to lower interest rates, as the Fed did last year, though officials say that the economy – thrown into a tailspin from Trump's trade war – has become too unstable to continue lowering rates. After Trump's 'liberation day' in early April, when he announced a slate of tariffs that ended up crashing US stock markets, Trump wrote on social media: 'This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. He is always 'late,' but he could now change his image, and quickly.' Powell, who was appointed during Trump's first term in 2018, has resisted the pressure from Trump and has warned that high tariffs could lead to inflation and, earlier in May, said that officials are 'in no hurry' to cut interest rates – all statements that seem to have put Trump on edge. ''Too Late' Jerome Powell is a FOOL, who doesn't have a clue,' Trump wrote after the Fed's meeting. Trump had previously threatened to fire Powell, though it's unclear whether the president has the power to do so. Last week, the supreme court allowed Trump to follow through on his dismissal of officials on the National Labor Relations Board, the panel that oversees labor disputes, but judges noted that the Federal Reserve is a 'uniquely structured, quasi-private entity' – implying that it likely won't be so easy for Trump to get rid of Powell.
Al Etihad
04-04-2025
- Business
- Al Etihad
US Fed Chair warns tariffs likely to push up inflation, cool growth
4 Apr 2025 19:45 ARLINGTON, United States (AFP) The recent tariffs introduced by President Donald Trump have increased the risk of higher unemployment and will likely cause inflation to rise and growth to slow, Federal Reserve Chair Jerome Powell said Friday."It is now becoming clear that the tariff increases will be significantly larger than expected," Powell told an event in Virginia in prepared remarks."The same is likely to be true of the economic effects, which will include higher inflation and slower growth," he said, adding that it was "too soon" to consider making changes to US monetary comments suggest the Fed is in no rush to cut its benchmark lending rate from its current elevated level of between 4.25 and 4.50 per cent, as it continues its struggle to bring inflation down to its long-term two- percent announcement earlier this week of heavy levies against top trading partners has rocked global markets as investors have grappled with the prospect of significantly higher import costs on everything from shoes to ahead of Powell's speech on Friday, Donald Trump took to his Truth Social account to insist that his policy would not change despite the market reaction, and called on Powell to act."This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates," he wrote. "He is always 'late,' but he could now change his image, and quickly." "Cut interest rates, Jerome, and stop playing politics!" added Trump, who first nominated Powell to run the Fed, before turning against him during his first term.
Yahoo
04-04-2025
- Business
- Yahoo
Trump says it's the 'perfect time' for Powell to cut rates as markets plummet after his shocking tariff announcements
President Trump fired off a flurry of social media posts early Friday as he defended his controversial tariff policies, shrugged off market volatility, and pushed for more rate cuts. 'This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates," Trump said in a post on his social media app Truth Social. "He is always 'late,' but he could now change his image, and quickly." "Energy prices are down, Interest Rates are down, Inflation is down, even Eggs are down 69%, and Jobs are UP, all within two months - A BIG WIN for America. CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!' On Friday, the March jobs report showed the labor market added 228,000 jobs in March, more than the 140,000 expected by economists. Shortly after the release, Trump praised the jobs numbers as 'far better than expected" in a separate Truth Social post, writing his policies are "already working. The president initially made headlines earlier in the day by doubling down on his aggressive tariff stance: "TO THE MANY INVESTORS COMING INTO THE UNITED STATES AND INVESTING MASSIVE AMOUNTS OF MONEY, MY POLICIES WILL NEVER CHANGE. THIS IS A GREAT TIME TO GET RICH, RICHER THAN EVER BEFORE!!!" Heading into Wednesday's "Liberation Day," the massive scope and intensity of Trump 2.0 tariffs had been underestimated by investors, despite the consistent promises from Trump on the campaign trail. In 2024, then-candidate Trump pledged to impose blanket tariffs of at least 10% on all trading partners, including a 60% tariff on Chinese imports. That promise materialized Wednesday (and then some) with the president slapping reciprocal tariffs on countries around the world, with the new levies ranging from a 10% "baseline" tariff to additional duties for nations the administration considers to be the "worst offenders." All told, Trump announced tariffs that will impact some 185 countries, including the United States's largest trading partners. Learn more: What Trump's tariffs mean for the economy and your wallet Additional reciprocal tariffs, for instance, will include 34% tariffs on Chinese imports, a 20% tariff on European Union imports, a 46% tariff on imports from Vietnam, 32% on Taiwan imports, and 26% on India — all set to take effect on April 9. Notably, the additional 34% tax on China will be added to the country's existing 20% tariff, meaning its total tariff rate will rise to 54%. Beijing retaliated early Friday with a slew of countermeasures that included additional tariffs of 34% on all US goods, on top of the 10% to 15% tariffs China levied on roughly $21 billion worth of US agricultural trade last month. In response to the retaliation, Trump said on Truth Social, "CHINA PLAYED IT WRONG, THEY PANICKED - THE ONE THING THEY CANNOT AFFORD TO DO!" Soon after, the president said Vietnam wants to cut tariffs "down to zero" if they can strike a deal with the US. Stocks cratered further on Friday in the face of China's retaliation, along with fresh comments from Fed Chair Powell that inflation from Trump's "larger than expected" tariffs could be more persistent. In early afternoon trade, the Dow Jones Industrial Average (^DJI) plummeted another 1,300 points after falling 1,700 points the day prior. Similarly, the S&P 500 (^GSPC) and Nasdaq (^IXIC) each sank over 3%. Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at
Yahoo
04-04-2025
- Business
- Yahoo
Powell says tariff inflation 'could be more persistent' as Trump urges him to cut rates
Federal Reserve Chairman Jerome Powell on Friday appeared to back away from a "base case" view that inflation from President Trump's new tariffs could be transitory, saying that "it is also possible that the effects could be more persistent' as the economy digests "significantly larger than expected" trade duties. Trump at the same time turned up the pressure on Powell, calling on him to lower rates. "This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. He is always 'late,' but he could now change his image, and quickly," Trump posted on social media, adding "CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!" Powell made it clear during his remarks at an event in Arlington, Va., that the Fed isn't going to take any rushed actions on rates due to many uncertainties, saying "it is too soon to say what will be the appropriate path for monetary policy." But because it is now clear Trump's planned tariffs are exceeding expectations, he added, "the same is likely to be true of the economic effects, which will include higher inflation and slower growth." While the size and duration of those effects "remain uncertain," the inflation impact has the potential to be longer lasting, he noted. "While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent." The acknowledgement that inflation has the potential to be more persistent differs from a stance that Powell took last month in a press conference with reporters where he said that his "base case" was that any extra inflation from Trump's slate of tariffs would be "transitory." That transitory stance aligned with a view also expressed earlier by Treasury Secretary Scott Bessent. Trump certainly made Powell's job that much more difficult this week as he unveiled the steepest tariffs in more than 100 years. Trump's tariff rollout this week also took markets by surprise, spurring the worst one-day rout in US stocks since the start of the 2020 Covid-19 crisis in March 2020. Stocks fell again Friday, deepening the market turmoil. Economists scrambled to revise their forecasts in ways that present twin challenges for the central bank: higher inflation and slower growth. Maybe, as some economists said, a US recession. Traders reacted by boosting the number of interest rate cuts they expect to see from the central bank this year to four, as they bet recessionary worries will outweigh concerns about rising prices. They expect the first cut in June. A new labor report released Friday didn't change those market expectations. Data from the Bureau of Labor Statistics showed 228,000 new jobs were created in March, more than the 140,000 expected by economists. The unemployment rate rose to 4.2% from the 4.1% seen in the prior month. Such a solid report certainly is not going to prompt any quick actions from the central bank, according to market observers. "This type of job report will not favor any kind of hurried cuts," said EY economist Gregory Daco. Powell reinforced that wait-and-see stance Friday, saying in his speech that "we are well positioned to wait for greater clarity before considering any adjustments to our policy stance." Some of his colleagues this week sounded a similar note. Philip Jefferson, vice chair of the Federal Reserve, said Thursday there is "no need to be in a hurry" to make adjustments to rates. Fed governor Lisa Cook said Thursday that tariff-related price increases and rising inflation expectations could argue for maintaining a "restrictive stance" on rates for longer to reduce the risk of inflation expectations becoming unanchored. There is now widespread disagreement among analysts on the Fed's path. Morgan Stanley said on Thursday it expects the Fed will not cut rates at all this year due to potential elevated inflation. Evercore said the likelihood of no cuts all the way up to more than five cuts in a recession are all roughly equal, although the firm's base case is two to three. Powell on Friday acknowledged that progress toward the Fed's 2% inflation goal 'has slowed,' citing a key gauge that was still at 2.8% in a recent reading. And "looking ahead, higher tariffs will be working their way through our economy and are likely to raise inflation in coming quarters." The central bank's job, he stressed, is to ensure that a one-time increase in prices "does not become an ongoing inflation problem." He also noted that while "many forecasters have anticipated somewhat slower growth this year," the "limited hard data are consistent with a slower but still solid growth outlook" even as the so-called soft data from surveys show dimming expectations due to trade policies. "We are closely watching this tension between the hard and soft data," he added. "As the new policies and their likely economic effects become clearer, we will have a better sense of their implications for the economy and for monetary policy." Click here for in-depth analysis of the latest stock market news and events moving stock prices
The Hill
04-04-2025
- Business
- The Hill
Federal Reserve chief says Trump tariffs likely to raise inflation and slow US economic growth
ARLINGTON, Va. (AP) — The Trump administration's expansive new tariffs will likely lead to higher inflation and slower growth, and the Federal Reserve will focus on keeping price increases temporary, Fed Chair Jerome Powell said Friday. Powell said that the tariffs, and their impacts on the economy and inflation, are 'significantly larger than expected.' He also said that the import taxes are 'highly likely' to lead to 'at least a temporary rise in inflation,' but added that 'it is also possible that the effects could be more persistent.' 'Our obligation is to … make certain that a one-time increase in the price level does not become an ongoing inflation problem,' Powell said in remarks being delivered in Arlington, Virginia. Powell's focus on inflation suggests that the Fed will likely keep its benchmark interest rate unchanged at about 4.3% in the coming months. That is likely to disappoint Wall Street investors, who now expect five interest rate cuts this year, a number that has increased since President Donald Trump announced the tariffs Wednesday. Trump, separately, urged Powell to cut rates, citing lower inflation and energy prices. 'This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates,' Trump said on his social media platform, Truth Social. 'CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!' Economists forecast that the tariffs will weaken the economy, possibly threaten hiring, and push up prices. In that scenario, the Fed could cut rates to bolster the economy, or it could keep rates unchanged — or even hike them — to combat inflation. Powell's comments suggest the Fed will mostly focus on inflation. Powell emphasized that the full impact of the tariffs on the economy aren't yet clear, and the Fed will likely stay on the sidelines until it has more clarity about the economy. 'It is just too soon to say what the appropriate … response will be,' Powell said. Powell's remarks come two days after Trump unveiled sweeping tariffs that have upended the global economy, prompted retaliatory moves by China, and sent stock prices in the U.S. and overseas plunging. Weaker growth and higher prices are a tricky combination for the Fed. Typically the central bank would reduce its key interest rate to lower borrowing costs and spur the economy in the event of slower growth, while it would raise rates — or keep them elevated — to slow spending and combat inflation. 'The Fed is in a tough spot with inflation set to accelerate and the economy poised to slow,' said Kathy Bostjancic, chief economist at Nationwide. Powell said the economy and hiring remain solid, for now, but he noted that consumers and businesses have become more pessimistic about the outlook. He also said inflation has fallen sharply from its peak in 2022, but said that recently progress toward the central bank's 2% target 'has slowed.' Some positive news arrived Friday when the government reported that hiring accelerated in March, with 228,000 jobs added, though the unemployment rate ticked up to 4.2%, from 4.1%. Yet those figures measure hiring in mid-March, before the scope of the duties became clear. The tariffs have also raised uncertainty about how the economy will fare in the coming months, which could limit businesses' willingess to invest and hire.
