US President Donald Trump took a positive tone following a rare visit in person to the Federal Reserve Headquarters in Washington, on Thursday. This suggests that central bank is moving closer to lower interest rates.
Trump was able to talk directly to Fed Chairman Jerome Powell during the visit. The tour included an expensive renovation project at the Fed, which he didn’t shy away from criticizing.
After their meeting, Trump described the discussion as “very productive”, and suggested that Powell might be open to the idea.
Trump said to reporters that Trump had stated emphatically “the country is doing very well.” He interpreted the comment as an indication of a more accommodating policy on the way.
Trump’s recent praise of Powell is a marked departure from the earlier criticisms he made. He referred to Powell as “a very good man.” This was a vast improvement from previous jabs when Trump had called Powell a numbskull for his unwillingness to lower interest rates.
Trump has continued to push the Fed into action in response to stubbornly high borrowing rates that are affecting housing affordability and consumer demands.
There is no easy way forward
Most economists and investors don’t expect the Federal Reserve to act immediately, despite President Trump calling for aggressive rates cuts of up to three percentage points.
Fed officials are clear in their approach to caution. The benchmark rate of the central bank has been stable between 4.25% and 4.45% since early 2025.
The Fed is most concerned about inflation.
The central bank has a 2% tolerance level for inflation.
The new wave of tariffs that President Trump levied against a number of trading partners has only added to this uncertainty.
Fed officials are now faced with a new layer of complexity. These tariffs may increase prices, stress supply chains and slow down economic growth.
The central bank is careful to not act too fast and cause unintended effects, because there are so many factors at play.
There are still signs of debate within the Fed.
Both Vice Chair Michelle Bowman, and Governor Christopher Waller indicated that they were open to a rate cut if the inflation remained in check and if the economy began to slow down.
Bowman, speaking at a Prague conference earlier in the month said that she would support a reduction at the July meeting as long as inflation data showed it was under control.
Chicago Fed President Austan Goolsbee shared some of this sentiment. He noted that, once the trade-related uncertainty is resolved, the central banks might have to relax their policy in order to avoid stagflation. Stagflation is a slowdown of growth combined with sticky inflation.
The Fed does not want to see a situation like this.
The post Trump says Powell is a “very good man” after his rare Fed trip, and hints of rate reductions ahead could be updated as new information becomes available.
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