Trump Pushes for Rate Cuts as Fed Stays Cautious on Inflation

He argued that a rate cut was necessary to counter the economic strain caused by tariffs, which he believes are starting to have a noticeable impact.

Despite Trump’s criticism, Federal Reserve officials remain cautious. Atlanta Fed President Raphael Bostic emphasized that economic uncertainty persists, even as businesses and households express growing concerns.

He noted that the Fed’s inflation outlook remains largely unchanged, with expectations that inflation won’t return to its 2% target until 2027. Bostic described the journey toward lower inflation as unpredictable, calling it “a very bumpy ride.”

Bostic also reaffirmed that the Fed currently anticipates only one rate cut this year, contradicting market speculation about multiple reductions in 2025. He acknowledged that tariffs have historically caused temporary price increases but warned that this time the effects could be different.

The Fed remains wary of making hasty policy adjustments, with Bostic stressing the importance of avoiding a scenario where rates are cut too soon, only to be raised again if inflation rebounds. However, he assured that the central bank would take appropriate action if economic conditions deteriorate significantly.