Trade war, inflation … but no drop in rate in sight

The federal reserve delays. It maintains its rates between 4.25 % and 4.50 % since December. But Donald Trump does not want to wait any longer. He demanded an immediate drop. For him, customs prices are enough to build the economy. The Fed wants to hideout. Result: Ten -stretched show between monetary independence and presidential will. The Fed meeting scheduled for this week promises to be electric. The markets hold their breath.

Trump vs Powell: an open war

Donald TrumpBitcoin lover president, does not like the wait. Even less when it comes from Jerome Powell, the owner of the Fed. Since his return to the White House, he fists. He wants lower rates.

“” No inflation, the Fed should lower its rate “, He wrote on Truth Social.

Powell remains stoic. He repeats that the Fed acts according to the data, not according to the presidential mood. But the president multiplies the attacks.

Powell is always too slow and too bad.

Behind the scenes, Some even evoke its dismissal. However, Powell is his own choice. Name, then wanting to dismiss: Trump remains faithful to his rupture logic. The context is special.

Inflation has slowed down, but stagnates at 2.4 %. Unemployment goes up, the markets are agitated. And Trump wants to restart at all costs. For him, the remedy is simple: lower rates, as in Europe.

The prices that change the situation

But The Fed does not follow. And for good reason. The customs prices imposed by Trump complicate the situation. 145 % on Chinese products. 10 % minimum on all imports. Even cocoa is surcharged. The objective? Reindustrialize America and fill the boxes. But the immediate result is an increase in prices. And a tension on consumption.

Loretta Mester, ex-Fed of Cleveland, alert:

Customs duties will at least slow down growth.

The risk of stagflation sets in. Soft growth. Imported inflation. Fragile jobs. Belinda Roman adds:

If the Fed lower the rates now, the markets will believe that it panics.

And if the markets panic, everything can deteriorate very quickly. The Fed hesitates, so it delays. Powell even quotes Ferris Bueller: “ Life goes very quickly ».

A wink, maybe. A metaphor, surely. We must observe, he said. Do not rush decisions. But Trump rushes.

Supporting figures, the duel continues

The economic ground is not reassuring. Unemployment up 4.2 %. Record layoffs in April. Stable inflation at 2.4 %, far from the peak of 2022, but still uncomfortable. Household confidence collapses. The expectations index is 54.4, an imminent recession threshold.

Faced with these figures, Trump wants to act. Powell wants to wait. The disagreement becomes public.

Here are the key figures of the moment:

• 4.25 % to 4.50 %: current rate maintained since December;
• 145 %: price imposed on Chinese products;
• 105,400: layoffs recorded in April, Post-Covid record;
• 54.4: confidence index, at the lowest since 2011;
• 2.4 %: inflation in March, stable since September.

For Trump, these signals require an immediate response. For the Fed, these are Power patternsno action. This offset feeds tensions. And speculation is growing. Rate or status quo? Both camps remain on their positions.

Donald Trump has long dreamed of dismissing Jerome Powell. And he never misses an opportunity to recall this desire. The pressure is intensifying. But will the Fed keep the course in the face of this political offensive?