Fed Officials Start to Agree with Trump on Lower Interest Rates

Some Federal Reserve officials are now echoing President Trump's calls for lower interest rates. Michelle Bowman, a key Fed official, recently suggested that the central bank should consider cutting rates soon to support the job market. She believes that if inflation stays under control, a rate cut could happen as early as the next Fed meeting. Bowman isn't alone in this thinking. Christopher Waller, another Fed governor, also downplayed the impact of Trump's tariffs on inflation, saying they might only cause a temporary price increase. Both Bowman and Waller were appointed by Trump, which might explain their alignment with his views on interest rates. However, not all Fed officials are ready to jump on the rate-cut bandwagon just yet. Austan Goolsbee, president of the Chicago Fed, hinted that if inflation doesn't pick up due to the tariffs, the Fed might continue its rate-cutting path. He mentioned that the Fed had been on a "golden path" before Trump's tariff announcement, implying that they might return to that path if inflation remains low. The Fed has been cautious, waiting to see how Trump's policies affect the economy before making any moves. At their last meeting, they kept interest rates unchanged for the fourth time in a row. But Trump has been vocal about his displeasure, even insulting Fed Chair Jerome Powell, calling him a "fool" and a "numbskull. " Now, the Fed's cautious approach is starting to shift, even with rising tensions in the Middle East, which could drive up global energy prices. The impact of the Israel-Iran conflict and Trump's tariffs on the economy is still unclear. Bowman noted that while there are risks, businesses might not pass on higher costs to consumers, especially for essential goods. Powell also downplayed the long-term impact of higher energy prices due to Middle East turmoil, saying that unlike the 1970s, the U. S. is less dependent on foreign oil. He believes any price spikes would likely be short-lived. However, economists warn that if the conflict escalates, it could significantly hurt the U. S. economy.