Breaking News: Fed Officials Shift Gears, Aligning with Trump’s Vision | CNN Business

Some Federal Reserve officials are echoing President Trump’s call for lower interest rates, potentially as soon as July. Fed Vice Chair Michelle Bowman believes lowering rates now could help maintain a healthy job market. She stated, “It is time to consider adjusting the policy rate. If inflation pressures stay manageable, I would support lowering rates at our next meeting.”

Bowman isn’t alone in this. Fed Governor Christopher Waller has also suggested that Trump’s tariffs might only lead to a small, temporary spike in inflation. Both Bowman and Waller are appointees of Trump, which adds a layer of political nuance to their suggestions.

For a while, Fed officials were cautious, preferring to assess how Trump’s policies impacted the economy before deciding on rate cuts. They kept the benchmark lending rate steady for the fourth straight meeting recently. This caution hasn’t pleased Trump, who has harshly criticized the Fed and Chair Jerome Powell, calling them out repeatedly for not lowering rates.

However, the Fed’s cautious approach is starting to shift. Global tensions, especially regarding the Middle East, could influence oil prices and inflation. Economists suggest that so far, high commodity prices haven’t trickled down to consumers, as businesses seem hesitant to raise prices due to economic sensitivity among shoppers.

Bowman noted that while the Israel-Iran conflict might drive up prices, many retailers are cautious about increasing costs due to the financial strain on low-income consumers. “I am watching inflation risks,” she said, “but I’m not seeing immediate price hikes.”

Powell shared a similar view, suggesting that spikes in energy prices during Middle Eastern turmoil tend to be temporary. He pointed out that the U.S. economy today is less reliant on foreign oil compared to the 1970s, a time when oil shocks significantly impacted inflation.

Economists are watching the situation closely. A report from EY-Parthenon warns that if the conflict escalates into a broader war, the U.S. economy could contract significantly. However, if tensions remain controlled, the economic impact could be much milder.

These evolving dynamics reflect a complex interplay between international events and domestic economic policy, demonstrating how interconnected our world has become.



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