“I’m concerned, and I’m watching them very vigilantly, but I’m also mindful that some of these factors could change, and they could change relatively soon,” he said on the sidelines of a conference in Chicago. “I just want to be patient and give it a little time and a little breathing room.”
Charles Evans, the head of Federal Reserve Bank of Chicago, and Mary Daly, the head of the Federal Reserve Bank of San Francisco, have also called for continuing the Fed’s pause in adjusting rates.
Officials are watching trade warily, however. In a speech on Monday, the president of the Federal Reserve Bank of St. Louis, James Bullard, said a cut in interest rates “may be warranted soon” to stoke inflation and “provide some insurance in case of a sharper-than-expected slowdown” in growth.
“The main story from Powell for near-term policy, in my view, is that this debate about whether the next move is a hike or a cut is effectively over,” Neil Dutta, an economist at Renaissance Macro Research, wrote in a note to clients after the speech. “They are no longer holding open the possibility of a hike.”
The president’s actions on trade have left the Fed in a tough spot. Growth remains above its longer-run trend and the job market is strong, which would argue against rate cuts. Plus, trade disputes could be resolved quickly, removing a major obstacle to continued expansion. But inflation is already low, and if a global slowdown provides a drag on the United States economy, Fed rates are still historically low — which could argue for quick, decisive action, since the central bank’s recession-fighting ammunition is limited.
Mr. Trump himself has been pushing the Fed to cut rates, even contrasting the central bank with China’s.
“China is adding great stimulus to its economy while at the same time keeping interest rates low,” Mr. Trump said in a tweet on April 30. He said that the economy would go up like a “rocket” if the central bank cut rates. “Our Federal Reserve has incessantly lifted interest rates, even though inflation is very low, and instituted a very big dose of quantitative tightening.”
