Fed Chair Jerome Powell blames Trump tariffs for high interest rates

Federal Reserve Chairman Jerome Powell Tuesday blamed President Trump’s unpredictable trade war for keeping interest rates stubbornly high.

The central bank chief said the Fed board was plannng to lower rates until Trump launched his mercurial on-again, off-again tariffs policy, which could wind up raising prices for American consumers.

“We went on hold when we saw the size of the tariffs,” Powell said at a banking conference in Portugal. “All inflation forecasts for the United States went up materially as a consequence of the tariffs.”

The Fed has kept interest rates steady for several months now as the U.S. economy continues to hum along better than many had expected. The bank’s mandate calls for it to keep inflation in check and to keep unemployment low.

Despite the pause, Powell noted that the Fed is likely to lower rates later in the year.

“A solid majority of (Fed officials) do expect that it will become appropriate later this year to begin to reduce rates again,” Powell said.

Two Fed board members have said they support cutting rates at the upcoming July meeting. But Powell insisted he “wouldn’t take any meeting off the table or put it directly on the table” for a potential rate cut.

Trump has bitterly attacked Powell for keeping interest rates too high, which he blames for increasing the costs of government borrowing and other supposed woes.

Just Monday, Trump issued a handwritten message to Powell demanding that he cut rates by a massive 1% or 2%.

Dispensing with the traditional independence of the Fed from politics, the president has threatened to fire Powell but backed off down. He’s now hoping to browbeat Powell into stepping down voluntarily so Trump can appoint a new chair to do his bidding.

Powell brushed off Trump’s sniping, suggesting he has no plans to leave before his term expires next May.

“I have a little more than 10 months left on my terms as chair,” Powell said. “I want to hand over to my successor an economy in good shape.”

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