Trump Shifts Stance on Fed Rates Amid Tariff Threats

WASHINGTON, D.C. — President Donald Trump on Sunday praised the Federal Reserve‘s decision to maintain interest rates, marking a significant shift from his previous demands for immediate rate cuts. Speaking to reporters, Trump endorsed the Fed’s choice to keep rates between 4.25% and 4.5%, calling it “the right thing to do.”

The president’s comments contrasted sharply with his remarks at the World Economic Forum in Davos, Switzerland, on Jan. 23, where he had demanded an immediate reduction in interest rates. Trump has no direct authority over the Fed, though he appoints its chair and board members. Jerome Powell, the current Fed chair and a Trump appointee, has frequently faced criticism from the president.

Markets anticipate that the Fed will not lower rates until at least June. Powell, during a news conference last Wednesday, emphasized the central bank’s cautious approach after reducing the federal funds rate by a full percentage point between September and December 2024.

Complicating the Fed’s decision-making, Trump announced on Saturday plans to impose aggressive tariffs on Canada, Mexico, and China, the United States’ largest trading partners. Economists warn that these tariffs could drive up prices, potentially undermining recent signs of easing inflation.

“I’m not surprised,” Trump said of the Fed’s decision, according to multiple reports. “Holding the rates at this point was the right thing to do.” The president’s evolving stance on monetary policy reflects the delicate balance between economic growth and inflationary pressures as his administration navigates global trade tensions.