In the shadow Trump tariffs, an interest rate cutting regime does not seem likely

This man wants his Tariff cake and he wants to eat it too.

The implication of the Trump tariffs is rising prices. One of the functions of interest on bonds and money lent is to check the rising prices that are the economic effect of inflation.

“Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!!! Lets Rock and Roll, America!!!” the president said in a morning post on Truth Social.

Do people still say “let’s rock and roll”?

This comes after Jerome Powell stated thusly…

In an appearance Wednesday before the House Financial Services Committee, Powell again wouldn’t respond directly to Trump’s desire for lower rates, but said “people can be confident that we’ll continue to keep our heads down, do our work, make our decisions based on what’s happening in the economy.”

Asked if “statements by elected officials are not among the things that cause you to act one way or the other,” Powell responded, “That’s correct.”

So we are setting up for Trump 2 vs. Powell, after a 4 year break from Trump 1 vs. Powell. You can click the image for the article.

I don’t even want to know how they plan to jimmy the 10yr Treasury yield. At the very least, I would think they need the Fed as its co-operator in such a manipulation. That’s how it usually works, Fed and Treasury working together, Powell-Yellen style (in my tin foil hat’s opinion, of course).

Currently we have a tamer Trump. He appears to be learning that the Fed and the massive banking interests behind it do not cower before a subordinate like the peoples’ president of the United States (again, the tin foil hat has its say).

Trump’s post also reflects a shifting narrative from the White House when it comes to monetary policy.

Shortly after taking office, Trump demanded that interest rates be lowered “immediately,” though he has no direct authority over the Fed. Days later, he said the central bank made the correct decision in holding rates steady at its late January meeting.

In subsequent remarks, Treasury Secretary Scott Bessent said the administration was more focused on lowering the 10-year Treasury yield than the short-term fed funds rate.

Maybe I am missing something key here, but if tariffs are a driver to inflationary effects and if declining interest rates are a driver to inflationary effects, would that not be a double barrel shot of future inflationary effects?

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