Trump backs Federal Reserve’s rate hold, contradicting earlier demands for cuts

President Donald Trump has backed the Federal Reserve's decision to keep interest rates unchanged, a marked shift from his previous calls for immediate rate cuts.

Speaking to reporters on February 2, Trump stated that he agreed with the central bank's move to hold its key borrowing rate in a range between 4.25% and 4.5%, Caliber.Az reports via foreign media.

“I’m not surprised,” he remarked, according to multiple reports. “Holding the rates at this point was the right thing to do.”

This statement stands in stark contrast to Trump's remarks made at the World Economic Forum in Davos, Switzerland, on January 23. During his remote appearance, he had said he would “demand that interest rates drop immediately.”

Although the president has no direct control over the Federal Reserve, he does have the authority to nominate its chairman and board members. Jerome Powell, the current chair, was nominated by Trump and has frequently been criticized by him.

Markets currently do not expect the Fed to lower rates until at least June. In his post-meeting press conference on January 29, Powell stressed that the Fed does not need to be in a “hurry” to reduce rates further after cutting them by a full percentage point from September to December in 2024.

However, the Fed's decision-making may become more complicated following Trump's announcement on February 1, that he plans to impose aggressive tariffs on Canada, Mexico, and China, the US's three largest trading partners.

Economists have raised concerns that such tariffs could push prices higher, potentially complicating efforts to control inflation, which has shown signs of easing.

By Aghakazim Guliyev