-
Despite appointing Jerome Powell as Fed Chair, Donald Trump and his allies continue to criticize the Federal Reserve for not cutting interest rates, especially as new tariffs and economic policies create uncertainty. The Fed remains cautious, with officials like Tom Barkin emphasizing the need for greater confidence in inflation trends before considering rate cuts, despite mounting political pressure.
Despite appointing Jerome Powell as the head of the Federal Reserve, in the months leading up to—and since—the presidential election, Donald Trump and his allies have continued to ramp up criticism of the Fed’s actions.
Namely, President Trump has pushed for Powell and the members of the Federal Open Market Committee (FOMC) to slash the base rate—or to have held it steady while President Biden was still in power.
The FOMC did neither of these things, and is increasingly unlikely to capitulate to pressure out of the White House, particularly because of the policies President Trump is announcing.
Trump’s so-called ‘Liberation Day’ of April 2 has been a date when many analysts finally expect some answers to the questions they have about further tariffs: Namely, will Trump deliver on the threats he has been making over the past year or so.
But Tom Barkin, president of the Richmond Fed, said April 2 could simply mark the beginning of a new cycle of uncertainty. He explained to CNBC’s Closing Bell: “It’s going to take a while before people know what rates are going to be imposed on what countries and what products. For what, for how long, with what kind of retaliation.
“And then importantly how do countries and businesses and consumers respond? So my base case is it’ll take a while to get clarity here.”
This caution is likely the opposite of what President Trump wants to hear, having demanded that interest rates come down. Now, however, instead of the FOMC continuing on the course of normalization previously expected throughout 2025, it is holding fire until it has further information about the ripple-effects of tariffs.
A key Trump ally, DOGE boss Elon Musk, stoked the criticism against the Fed this weekend, saying it’s time to “end” America’s central bank.
President Barkin has previously pointed out that in the years since the pandemic businesses have clawed back some of their pricing power instead of squeezing margins in order to stay competitive.
This became particularly clear in 2022, he outlined, when prices were pushed up by supply-side issues but could be absorbed by consumers who were boosted by government fiscal stimulus.