Business, Finance & Tech
Trump’s Tariffs Put Pressure on Fed as Interest Rates Hold Steady
President Donald Trump’s aggressive economic agenda is intensifying pressure on the Federal Reserve. As the central bank wrapped its latest policy meeting, Chair Jerome Powell announced that interest rates will remain unchanged—holding between 4.25% and 4.5%, where they’ve been since December.
“Today the Federal Open Market Committee decided to leave our policy interest rate unchanged,” Powell said in a press conference.
The decision comes as the effects of sweeping tariffs introduced by President Trump begin to ripple through global trade, with concerns mounting about rising prices and economic slowdown. Harvard economist Ken Rogoff says the Fed is resisting political pressure.
“Powell is gonna speak the truth as he sees it about the economy. He's not gonna be bullied by Trump,” Rogoff said.
Despite mounting inflation and signs of weakening confidence, Powell emphasized caution. “The risks of higher unemployment and higher inflation appear to have risen,” he said, adding that the Fed remains prepared to respond “in a timely way” to any significant economic changes.
Rogoff warns that the current path could lead to a recession. “Prices are gonna go up. The surveys, the confidence—everything looks like it's more than 50% that it'll be a recession,” he said.
Meanwhile, all eyes are on upcoming trade talks. U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer are scheduled to meet with Chinese officials in Switzerland later this week. Analysts hope the meetings could help de-escalate growing trade tensions.
Trump, long a critic of Powell, has in the past suggested replacing the Fed Chair before the end of his term. This week, however, the president appeared to soften that stance.
"I'm not, you know, I get to change him very quickly anyway, you know, it's in a very short period of time," Trump said.
As economic uncertainty grows, the Federal Reserve will likely face increasing scrutiny over its next moves.
Credit: CNN Newsource
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By: NBC Palm Springs
May 7, 2025
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