The president of the federal reserve, Jerome Powell, said on Wednesday that President Donald Trump’s prices were partly to blame for price increases, increasing criticism a few minutes after the central bank announced his decision to hold stable interest rates.
The rate decision has occurred for weeks after Trump approached a world trade war which sent actions in shock and aroused concerns about a possible recession.
Even if the Fed has left its main political lever unchanged, the Central Bank predicted economic growth at the end of the year, higher and higher inflation than in a December forecast. At the end of 2025, inflation will amount to 2.8%, slightly greater than a previous prediction of 2.5%, said the Fed.
The Fed expects reductions in two -point prices at the end of 2025, corresponding to its previous prediction.
Speaking in Washington, DC on Wednesday, the president of the Fed, Jerome Powell, said that the economy was facing uncertainty, stressing “important political changes in the Trump administration” concerning trade, immigration, fiscal policy and regulations.
“This is the clear effect of these policy changes that will import for the economy and for the path of monetary policy,” said Powell. “The uncertainty about changes and their effects on economic perspectives is high.”
Powell admitted that the prices had contributed to a “good part” of recent price increases.
The Fed has withdrawn in its fight against inflation in recent months of last year, reducing interest rates from a percentage point. However, Fed’s interest rate remains at a historically high level between 4.25% and 4.5%.
Powell’s comments echoed the remarks he made less than two weeks ago, when he said that prices would probably increase prices, while pleading for a waiting posture while Trump’s economic policies take shape.
“We focus on the analysis of the noise signal as the situation evolves,” Powell told an economic forum in New York. “We are not in a hurry.”
The Trump administration earlier this month slapped 25% of prices on goods in Mexico and Canada, although the White House quickly imposed a month’s delay for some of the prices. A new series of tasks on Chinese products has doubled a first set of prices placed on China a month ago.
The prices imposed on steel and aluminum triggered the European Union reprisals and the European Union, adding to the countermeasures already initiated by China last week.
Last week, S& P 500 closed more than 10% compared to its summit last month, marking the first correction of the index since October 2023. The industrial average of Dow Jones has undergone its worse decrease of one week since March 2023.
A customer purchasing eggs in a grocery store on March 12, 2025, in Chicago.
Images Scott Olson / Getty
By certain key measures, the economy remains in solid shape. A recent jobs on jobs showed regular hiring last month and a historically low unemployment rate. Inflation is well below a peak reached in 2022, although price increases recorded almost a percentage point higher than the Fed target of 2%.
Returning to his first mandate, Trump has repeatedly urged the Fed to reduce interest rates.
In January, during a virtual allowance at the World Economic Forum in Davos, Switzerland, Trump called on the Central Bank to reduce rates a few days before it was about to announce an interest rate decision.
During the meeting that followed this month, the Fed decided to have stable interest rates. Speaking at a press conference in Washington, DC, after the announcement, Powell refused to comment on Trump’s call at lower interest rates, saying that it would be “inappropriate” to answer.
“The public should be convinced that we will continue to do our job as we have always done,” said Powell, adding that the Fed would continue to “use our tools to achieve our goals”.
