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Trump has said he wants lower interest rates, but he may be standing in his own way.
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The president said last week that he would demand that interest rates be lowered.
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His policies, though, are an obstacle the Fed could have to navigate as it adjusts monetary policy.
President Donald Trump has called for interest rates to come down and escalated his criticism of the Federal Reserve chair, Jerome Powell, after this week's policy meeting.
But the president himself may be the biggest obstacle to lower borrowing costs, as his policies risk exacerbating an issue he campaigned on fixing: rising prices.
Powell sent a clear message this week that central bankers were in no rush to lower rates, with Fed officials opting to pause rate cuts in the first policy meeting of the year.
That seemed to defy pressure from Trump, who said in his address to the World Economic Forum last week that he'd demand that interest rates be lowered "immediately."
"Because Jay Powell and the Fed failed to stop the problem they created with Inflation, I will do it by unleashing American Energy production, slashing Regulation, rebalancing International Trade, and reigniting American Manufacturing," Trump wrote on Truth Social after Wednesday's rate decision.
He argued that his policies — including plans to levy steep tariffs on imports from China, Canada, and Mexico — could help renew the US economy.
But those plans could end up being the very obstacle the Fed has to navigate this year as it decides what to do with interest rates, and they're likely the reason it'll hit pause until the picture becomes clearer, Wall Street forecasters say.
"The reality is that the Fed is simply trying to respond to the data and the new administration's policies as they unfold," Seema Shah, the chief global strategist at Principal Asset Management, said in a note. "At times like these, when government policy — particularly tariff policy — is so uncertain, they do not have a forecasting edge. Keeping policy rates on hold until a clear direction starts to emerge is sensible."
Others said that, despite Trump's insistence that rates come down quickly, the Fed could afford to take its time after cutting at a brisk pace in the final stretch of 2024.
"After cutting rates by 100bps last year, even though the economy was generally in good shape, the Fed can now afford to be patient while it evaluates the economic impact of policy changes under the Trump administration," Paul Mielczarski, the head of global macro strategy at Brandywine Global, said. "Meanwhile, broad-based tariffs would have a meaningful impact on goods inflation at a time when core inflation is still above 2%."