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Trump says lower interest rates would go hand-in-hand with tariffs
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Trump says lower interest rates would go hand-in-hand with tariffs
Feb 12, 2025 6:12 AM

(Reuters) - President Donald Trump on Wednesday said that interest rates should be lowered and that would go "hand in hand" with his upcoming tariffs, despite economists' expectations that tariffs would fuel inflation and postpone rate cuts.

Trump substantially raised tariffs on steel and aluminum imports on Monday to a flat 25% "without exceptions or exemptions" in a move he hopes will aid struggling industries in the United States, but which also risks sparking a trade war.

"Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!!!" Trump wrote in a post on his Truth Social platform.

However, Federal Reserve Chair Jerome Powell told U.S. lawmakers on Tuesday the Fed was in no rush to cut its short-term interest rate again given an economy that is strong overall.

Powell is to testify before the House Financial Services Committee on Wednesday as Trump's trade advisers finalize plans for additional reciprocal tariffs.

A Reuters poll showed the Federal Reserve was expected to wait until the next quarter before cutting rates again. Tariffs could fuel U.S. inflation and postpone rate cuts.

Data earlier on Wednesday showed U.S. consumer prices increased more than expected in January.

Economists have raised their inflation forecasts since Trump was elected, based on concerns his policies, particularly on tariffs, could re-ignite price pressures in the economy.

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