Donald Trump on Wednesday morning dismissed a higher than expected inflation report as “Biden inflation” after making another call to lower interest rates.
The US president reacted to the release of the data showing headline consumer prices rose more than forecast by posting “BIDEN INFLATION UP!” on Truth Social.
The post came just an hour after another post earlier Wednesday morning that read “Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!!!”
“Lets Rock and Roll, America!!!” the president added in a post that wasn’t clear if he was talking about the Federal Reserve’s short-term rate, the 10-year Treasury yield, home mortgage rates, auto loans, or all of the above.
About halfway in between the two posts, at 8:30 am ET, the latest data from the Bureau of Labor Statistics was released showing that the Consumer Price Index (CPI) increased 3% over the prior year in January, an uptick from December’s 2.9% annual gain in prices.
The rapid back-and-forth from the president on the interconnected issues of interest rates, tariffs, and inflation came after Federal Reserve Chair Jerome Powell told lawmakers Tuesday “we do not need to be in a hurry” on rates.
Wednesday morning’s pickup in inflation could make lower rates less likely when it comes to the Fed’s benchmark federal funds rate.
Markets already didn’t see a high chance of another Fed cut until this fall or even next winter, with the probabilities falling even lower on Wednesday morning.
Trump’s mention of tariffs also came after the president announced new 25% tariffs on steel and aluminum earlier this week and promised new reciprocal tariffs will be unveiled as early as today
The Wednesday morning focus on interest rates also came after an Oval Office appearance Tuesday afternoon when Trump predicted that Elon Musk and his Department of Government Efficiency would eventually find close to $1 trillion in cuts and cut the federal deficit in half.
Musk then added that the effects of those cuts — alongside other actions like trimming regulations — would have a stark effect and mean zero inflation and a lowering of interest rates.
The Tesla and SpaceX CEO asked reporters in the room to imagine a scenario where next year “they’re going down the grocery aisle and the prices from one year to the next are the same and all the debt payments have dropped.”
