Jerome Powell blames Trump's policies for inflation and no rate cuts
Updated
Updated · The Motley Fool · May 4
Jerome Powell blames Trump's policies for inflation and no rate cuts
13 articles · Updated · The Motley Fool · May 4
At his final FOMC meeting before leaving on 15 May, Powell said core PCE rose 3.2% in March, largely reflecting tariff-driven goods inflation.
He also cited the Middle East conflict and Iran war as adding uncertainty and lifting energy prices, with US regular gasoline up $1.16 a gallon since late February.
The remarks suggest rate cuts are unlikely in 2026, disappointing investors who had expected easier policy to support elevated Dow, S&P 500 and Nasdaq valuations.
Stocks are at record highs, yet the Fed warns of prolonged high rates. Who is right about the economy's future?
With war and tariffs fueling inflation, can the Fed control prices without triggering a recession?
How will the historic disruption of Middle East oil supplies permanently reshape the U.S. economy?
From Pandemic to Tariffs: Jerome Powell's Struggle to Tame Inflation Amid Trump’s Political Assault
Overview
The Trump administration's tariffs on Chinese and EU goods caused a full price pass-through to U.S. consumers, raising inflation by about one percentage point in 2025 and keeping it stubbornly high at 3%. Combined with energy price surges from geopolitical tensions, these pressures constrained the Federal Reserve, forcing it to maintain higher interest rates longer, which increased borrowing costs and slowed economic activity. Despite intense political pressure and a criminal investigation aimed at undermining Fed Chair Powell, he defended the Fed's independence and resisted premature rate cuts. Powell's tenure saw a pandemic-driven stimulus, a delayed inflation response, and ultimately a rare soft landing, but his successor faces renewed inflation risks amid internal Fed divisions and geopolitical uncertainty.