The Federal Reserve left interest rates unchanged at its March meeting, shortly after President Donald Trump made it known he prefers a different strategy.
“The Fed would be MUCH better off CUTTING RATES as U.S.Tariffs start to transition (ease!) their way into the economy. Do the right thing. April 2nd is Liberation Day in America!!!” he posted on Truth Social.
The Fed hiked its inflation forecast in the overall projections with the personal consumption expenditures (PCE) index, policymakers’ preferred inflation gauge, to 2.7% for this year — higher than the 2.5% estimate released late last year.
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Inflation, per the consumer price index, rose 2.8% in February, above the Fed’s 2% mandate. Plus, prices for food are much higher, with eggs up 58.8% and uncooked beef up 7.8%, on an annual basis.
FED LEAVES RATES UNCHANGED, UPDATES ON RATE CUT PLAN
Powell, during his Wednesday press conference, was asked if tariffs are stoking inflation.
“It is going to be very difficult to have a precise assessment of how much of inflation is coming from tariffs and from others,” he said. “Goods inflation moved up pretty significantly in the first two months of the year; trying to track that back to actual tariff increases, given what was tariff and what was not, [is] very, very challenging.”
Even so, Powell suggested any tariff inflation could be “transitory.”
“As I’ve mentioned, it can be the case that it’s appropriate sometimes to look through inflation if it’s going to go away quickly without action by us, if it’s transitory, and that can be the case in the case of tariff inflation,” he added.
Early April is when more tariffs will be unveiled. Treasury Secretary Scott Bessent said it won’t be a one-size-fits-all.
“Each country will receive a number that we believe represents their tariffs. So, for some countries it could be quite low, for some countries it could be quite high,” he said during an appearance on FOX Business Network’s “Mornings With Maria” this week.
For the second consecutive meeting, the central bank left the benchmark federal funds rate between 4.25% and 4.5% and signaled the likelihood of two more rate cuts this year.
The last three consecutive rate cuts in 2024 were a 50-basis-point cut in September and a pair of 25-basis-point reductions in November and December.
FOX Business’ Eric Revell contributed to this report.
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