On April 7, 2025, President Donald Trump escalated his campaign for the Federal Reserve to reduce interest rates, contending that the U.S. economy shows no signs of inflation. In Truth Social posts, Trump pressed Fed Chairman Jerome Powell to act decisively, citing declining energy and food prices as proof of a prime opportunity. This stance follows Trump’s recent trade initiatives, including retaliatory tariffs that have unsettled global markets, adding to economic volatility.
Trump’s Economic Reasoning
Trump views the U.S. economy as perfectly positioned for lower rates. “Oil prices are crashing, interest rates are slipping (the Fed’s too slow—cut rates!), food prices are lower, there’s NO inflation, and America, cheated for years, is gaining billions weekly from countries taxing our goods,” he wrote. He argued that despite counter-tariffs—like China’s 34% hike on U.S. products—the economy could surge with rapid Fed action.
Some figures support his position. The U.S. Bureau of Labor Statistics shows the Consumer Price Index (CPI) stable, with core inflation at 2.4% in March 2025, near the Fed’s 2% goal. The Department of Energy noted West Texas Intermediate (WTI) crude oil falling below $60 per barrel in early April, a four-year low. The U.S. Department of Agriculture reported a 69% egg price decline over two months, tied to improved supply and lower costs.
Market Upheaval and Fed Reserve
Trump’s plea comes during market turmoil. His April 2, 2025, tariffs on over 180 nations led to a sharp decline—the S&P 500 lost over 10% in two days, and the Nasdaq hit correction levels. Internationally, China’s Hang Seng Index dropped 13%, and Japan’s Nikkei 225 fell 7.8%, raising trade war concerns. JPMorgan Chase warns that ongoing high tariffs could push the U.S. toward recession absent monetary easing.
The Fed, though, is proceeding cautiously. Its March 2025 Federal Open Market Committee (FOMC) meeting projected only two rate cuts for the year, below the four markets expect per the CME FedWatch Tool. Jerome Powell has emphasized a data-driven path, saying, “We won’t bend to political calls—our moves depend on the numbers.” He’s also noted trade policy risks, like supply chain disruptions, as a reason for restraint.
Rate Cut Consequences
Lowering rates could stimulate growth by reducing borrowing costs. The U.S. Labor Department’s March 2025 report showed 228,000 jobs added and a 4.2% unemployment rate. A rate cut could enhance this, encouraging spending and investment. However, skeptics argue that with inflation low, additional cuts might overstimulate or devalue the dollar, particularly as tariffs raise import costs.
Trump’s rocky Fed relationship endures. In his first term, he frequently criticized Powell, his 2018 choice, for delayed cuts. Now, in his second term, he’s amplifying this push, framing Powell’s hesitation as a missed shot at U.S. economic leadership. “It’s the PERFECT time for Jerome Powell to cut rates. He’s always behind, but he can act now,” Trump posted.
Trade Tactics and Economic Vision
Trump’s rate-cut call aligns with his broader economic approach—tough trade policies paired with growth objectives. His team praises tariff income—billions weekly—as a boon for workers. Views differ: some back the trade rebalancing, while others fear friction with nations like China, Mexico, and Canada could spark supply chain issues and inflation.
The IMF cut its 2025 global growth forecast to 2.8%, citing trade woes. The National Association of Manufacturers said 75% of members worry about tariff-related cost spikes, potentially negating rate-cut advantages.
What’s Coming
As of April 7, 2025, the Fed hasn’t signaled a shift to Trump’s demands. Its late April meeting will hint at rate directions, with markets on edge for more volatility. Citi’s Stuart Kaiser noted, “Stocks could dip further if trade tensions rise.” Trump’s low-rate, high-growth plan hinges on Powell’s response—whether the Fed acts or stands firm will shape the U.S. economy’s future.
