President Donald Trump issued a broadside against Federal Reserve chairman Jerome Powell in an ongoing dispute over interest rates, and CNN's Rahel Solomon analyzed what that might mean to the U.S. economy.
The president called for rate cuts Thursday morning on Truth Social, saying "Powell’s termination cannot come fast enough," but the Fed chairman said the central bank won't intervene to bail out the stock market that's been battered by Trump's tariffs.
"The U.S. was already in a trade war," said CNN's John Berman. "Now the president is kind of in a Fed war also."
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Berman turned to Solomon, who hosts "Early Start," for analysis.
"This is sort of the latest example of Trump sort of railing against the Federal Reserve chair for what he calls the chair not lowering rates as much as he would like them to," Solomon said. "But these comments yesterday from Jay Powell, I thought were so interesting, less because of what he said, but more so how he said it. I found his comments to be very direct, very clear, very little room for ambiguity, which isn't always the way Jay Powell speaks. He said, look, these tariffs will almost certainly mean higher inflation, at least for the rest of this year, and higher unemployment for the rest of this year and slower growth."
"Very clear sort of what they are expecting in terms of these tariff announcements," Solomon added, "if they are, in fact, to go into go into effect, and he also said that the announcement and the tariffs are even higher than the worst-case scenario that they had been penciling in or anticipating."
Powell told the Economic Club of Chicago on Wednesday that the level of tariff increases was significantly higher than anticipated, which he warned would increase inflation and hinder growth, and he made no assurances the Fed would come to the rescue.
"In the midst of more turmoil in the stock market or the bond market, it was a wide-ranging conversation that included Powell reiterating the Fed's independence, which is especially interesting considering the president's Truth Social post this morning," Solomon said. "It was the only response, at least from what I could hear, the only response where he got an applause. He said, look, there is broad support in both parties for an independent Fed, and that essentially the Fed doesn't bow to political pressure no matter who is in office."
Berman agreed the chairman's warnings about the economy were stark, and he said that candor apparently angered the president.
"You make a great point, which is that normally he speaks in these coded terms – he didn't yesterday," Berman said. "That was plain English that even people like me could understand. I mean, he was talking about slower growth, higher inflation and the fact that he was going to have to do something about it and make tough choices, and obviously, the president didn't like to hear that spurring what he said just a few minutes ago."
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