US President Donald Trump has called on the Federal Reserve to cut interest rates immediately amid a surge in consumer price inflation. The June inflation rate rose to 2.7 percent year-on-year, the highest reading since February.
Trump claimed that consumer prices are low and urged the Fed to lower interest rates now. However, the Fed’s Board of Governors has resisted cutting rates despite Trump’s pressure, citing concerns over the impact of his tariffs on prices.
The acceleration in inflation is a blow to Trump’s allies who have been pushing for rate cuts to stimulate the economy. Core inflation, which excludes food and energy costs, increased by 2.9 percent in June from a year earlier.
Trump has repeatedly criticized Fed Chair Jerome Powell, saying he is “too late” and that his policies are costing the US $360 billion dollars per year. Trump wants a three-point rate cut and claims that lower interest rates will boost the economy and attract businesses to America.
Despite Trump’s demands, some companies have announced plans to raise prices due to the tariffs, including Walmart and Mitsubishi. However, many others have been able to postpone or avoid price increases by building up their stockpiles of goods.
The Fed has a dual mandate to maintain full employment and stable prices, with its target range currently set at 4.25 percent to 4.50 percent. The Fed’s independence is also seen as crucial to the US economy.
Source: https://www.newsweek.com/inflation-trump-fed-cpi-bls-2099138