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Powell puts the brakes on interest rates: ‘It’s Trump’s tariffs’ fault’

Fed chairman responds to pressure from the White House: inflation is linked to trade policies

It is no secret that relations between Donald Trump and Jerome Powell are tense. But this time, the Federal Reserve chairman, long a target of criticism from the tycoon, has decided to respond decisively. He did so by linking the impossibility of cutting rates to the White House’s trade choices, particularly tariffs, which are contributing to high inflation.

‘We cannot cut rates if tariffs are pushing up prices’
During a public speech, Powell clearly explained the crux of his position: ‘Inflation in the United States has fallen to 2.3%, but after the announcement of the new tariffs, we opted for a cautious approach because inflation expectations have risen. The wisest choice in this context is to wait, observe developments and assess the effects.’

The message is clear: while Trump’s trade policy is generating new inflationary pressures, it is not possible to intervene with expansionary measures such as rate cuts without compromising price stability.

The Fed does not bow to political pressure
This is a clear criticism of the White House’s strategy. Trump has been pushing for months for the Fed to reduce the cost of money to support the economy, but Powell remains firm in defending the central bank’s independence. ‘I am very focused on my job,’ he reiterated, recalling the three pillars of the Fed’s mandate: full employment, price stability and financial stability.

Powell also sent an implicit message about public budget management, describing the need to address the federal debt issue as ‘urgent’, a topic that continues to cause friction with the Trump administration.

A Fed chairman under attack, but steadfast
Trump, for his part, continues to push for a change of leadership at the Fed, but replacing Powell is not easy. The head of the central bank has a clear mandate and shows no intention of backing down. His approach remains rooted in economic orthodoxy, even at the cost of colliding with the White House.

The result is a standoff that risks affecting the US economy, already under pressure from trade tensions and financial uncertainty. With inflation rising and markets waiting, the battle between US monetary and fiscal policy is far from over.

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