The Wall Street Journal editorial board is sounding the alarm on Trump's economic policy. “Does President Trump understand money?” they ask. In a piece published Wednesday, the board criticizes Trump for calling for lower interest rates as inflation increases.
“Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!!!” Trump wrote in a post on Truth Social. This idea has “layers of intellectual confusion,” the board writes — higher tariffs will mean higher prices for some products.
“Perhaps the President wants the public to look elsewhere when assigning blame for rising prices,” the board writes. “Yet if he’s trying to blame the Federal Reserve, which controls short-term interest rates, he has the analysis backward. Rising inflation means the Fed must be more cautious in cutting rates.”
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Jerome Powell, chair of the Federal Reserve, has said recently that he is not interested in cutting interest rates. On Tuesday, he told a Senate committee that he and his colleagues "do not need to be in a hurry" in terms of these cuts given higher inflation and a strong job market.
“The last thing Mr. Trump should be doing now is demanding that Mr. Powell cut rates further and faster — unless the President wants inflation to resume its Biden-era climb,” the board writes.
They don’t expect Powell to follow Trump’s orders, but they find the example illuminating.
“The Powell Fed is likely to ignore Mr. Trump, and well it should," they write. "But the President’s demand illustrates another risk of Trumponomics. As a real-estate investor, Mr. Trump has long been an easy-money guy. He likes low rates and a weak dollar, which could lead to higher prices, all other things being equal."
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“As a political matter,” they continue, “an inflation revival may be the biggest threat to the Trump Presidency. Mr. Trump was elected as voters reacted to inflation and falling real incomes under Joe Biden. Real average earnings are flat over the last three months as inflation has bounced up. If this persists, Mr. Trump won’t have a 53% job approval rating for long.”