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Trump Says Fed Must Lower Rates After Soft Inflation Report
Wednesday, 14 May 2025 01:48 WIB | GLOBAL ECONOMIC |Federal Reserve

President Donald Trump cited a softer-than-expected inflation report to again pressure Federal Reserve Chair Jerome Powell to lower interest rates.

"No Inflation, and Prices of Gasoline, Energy, Groceries, and practically everything else, are DOWN!!!" Trump wrote in a social media post. "THE FED must lower the RATE, like Europe and China have done. What is wrong with Too Late Powell?"

Trump added that the Fed's strategy was "not fair to America, which is ready to blossom."

"Just let it all happen, it will be a beautiful thing!" he continued.

The consumer price index rose 0.2% in April on a monthly basis after declining for the first time in almost five years in the prior month. It was the third consecutive month where price growth came in below estimates.

The report comes as Trump is downplaying fears of price hikes and shortages driven by his tariff regime. Trump has applied a 10% global tariff on nearly every country, while applying or threatening separate duties on key sectors, measures which have roiled markets and spurred worries about higher costs for US consumers and an economic slowdown.

April's data are far from conclusive. While economists have generally expected companies to pass the costs from Trump's punitive tariffs on to consumers, many of the imported goods on US shelves last month arrived in the country before the new duties came into effect. 

Some businesses are also absorbing the hit themselves in an effort to avoid a pullback in demand at a time when consumers are already feeling jittery about the economy.

Moreover, weakness in services categories like airfares, hotels and recreation — which points to softer demand for non-essentials — also contributed to the tame CPI advance.

Still, grocery prices fell by the most since 2020, welcoming news to cash-strapped Americans. The decline was driven by the biggest drop in egg prices in four decades, offering some reprieve after a surge in bird flu cases pushed prices to record highs earlier this year. The prices of other important staples including bacon, chicken and rice also fell.

Trump has regularly touted the price of gasoline and other goods in downplaying inflation risks, even while acknowledging that his tariffs might force consumers to pare back demand on some products.

Trump's higher so-called reciprocal tariffs on about five dozen countries and the European Union, are paused at 10% until July, but could rise again then. Trump announced higher tariffs in April and then paused them, giving countries time to negotiate deals with his administration.

The president has pushed Powell to lower interest rates even as the central bank held rates steady. Powell and his colleagues say that Trump's sweeping tariff war has created risks of higher inflation and unemployment. The soft inflation data out Tuesday offered support for bets on at least two rate cuts this year.

Source : Bloomberg

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