The cat-and-mouse game continues between President Donald Trump and Federal Reserve Chair Jerome Powell. For weeks, Trump has been pushing Powell to lower interest rates, even directly insulting Powell as "dumb" and "destructive" while accusing the Fed of costing the country billions of dollars by keeping rates high. At the same time, Powell and the Fed have held rates steady since the start of the year, while cautioning about tariffs and inflation. In his latest remarks, Powell again says he still needs to "wait and learn more" before deciding on a rate cut.
Financial planner Richard Rosso believes Powell is being ultra-cautious because he is spooked by Trump's tariffs, even though they have yet to show any big negative impact. "What Powell is telling us is that he would have been (lowering rates) already if it weren't for tariffs," says Rosso. "He is afraid of some inflation boogie man that may not show up."
Assuming there is not some unexpected hike in inflation over the next few weeks, Powell likely won't hold out much longer. The markets are already pricing in a 90% likelihood of a rate cut by September. Rosso believes some of this is just gamesmanship by Powell to assert his independence in the face of Trump's pressure. "I think if President Trump would just be quiet about it, it would happen sooner, because it is inevitable...it is going to happen," he tells KTRH. "The inflation boogie man is probably never going to show up."
"But Trump keeps pressing Powell, and then Powell responds back...he's not going to just sit there and take it."
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