Donald Trump urges ‘perfect time’ for rate cut as Jerome Powell warns of ’larger than expected’ tariff-driven inflation

US President Donald Trump on Friday called for Federal Reserve Chairperson Jerome Powell to go for interest rate cuts, citing lower energy prices, interest rates and inflation among others.

His comments come at a time when US markets are facing a bloodbath after his sweeping tariff announcement that he said was for the benefit of America and Americans. Donald Trump has been persistently calling for a Fed rate cut from Powell, his handpicked central bank leader with whom he had a falling out.

“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,” Donald Trump said in a post on Truth Social, a platform owned by him.

Trump seemingly ordered Jerome Powell to cut interest rates, which currently stand in the range of 4.25 per cent to 4.50 per cent.

“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,” Donald Trump wrote in the post.

The US President's comments comes days after he unveiled a series of tariffs on almost all countries across the world, a move that economists believe would result in a global economic slowdown. Global markets, including those in the US, have gone into shock, shedding trillions in investors' wealth.

Jerome Powell: ‘Trump tariffs significantly higher than expected’

Federal Reserve Chair Jerome Powell on Friday expressed his shock over Trump's tariff announcement and said the levies and their impact 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.”

However, he also sounded alarm that the effects of the tariff announcement could be “more persistent”.

“Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem,” he said. “We are well positioned to wait for greater clarity before considering any adjustments to our policy stance.”

Powell ‘not in a hurry’

Speaking in a conference on Friday, Powell said that the Fed was not in a hurry to cut interest rates.

“Our macroeconomists are all working hard to, you know, to kind of digest the news of this week and try to filter that into the forecast that they’ll make, and policymakers are doing very much the same thing,” Powell said at the conference.

“I will say, though, it feels like we don’t need to be in a hurry,” he added.

He said that the Fed is not yet clear about what policy moves it needs to make in response — if any.

“To me, it’s not clear at this time what the appropriate path for monetary policy will be, and we’re going to need to wait and see how this plays out before we can,” he said.

Will Jerome Powell cut interest rates?

Jerome Powell's remarks on remaining focussed on the inflation problem suggests he won't be following Donald Trump's suggestion and have the Fed keep its benchmark interest rate unchanged at about 4.3 per cent in the coming months.

This may come as a disappointment to Wall Street investors, who were expecting at least five rate cuts this year, with the number increasing after Trump tariff announcements.

Economists forecast that the tariffs will weaken the economy, possibly threaten hiring, and push up prices. In that case, the Fed is likely cut rates to bolster the economy, or it could keep rates unchanged - or even hike them - to combat inflation.

The Fed’s next meeting will be held during the first week of May.