President Donald Trump on Tuesday pointed to fresh inflation numbers from December and said they prove the Federal Reserve should start cutting interest rates now. New data released by the US Bureau of Labor Statistics showed that inflation did not rise further last month. Consumer prices were up 2.7% compared to a year ago. Core inflation, which leaves out food and energy prices, came in slightly lower at 2.6%.
Inflation stays steady, Trump says it’s time to cut rates
According to Fox Business, economists had expected headline inflation to be exactly where it is, while core inflation turned out a bit softer than predicted. Even though inflation is still above the Federal Reserve’s long-term target of 2%, Trump said it is already low enough to justify a rate cut.
“We have very low inflation. That would give ‘too late Powell’ the chance to give us a nice beautiful, big rate cut,” Trump told reporters before leaving Washington for an economic event in Detroit.
Speaking of which, Trump once again took aim at Federal Reserve Chair Jerome Powell, repeating his demand that the central bank lower borrowing costs. Speaking in Detroit later in the day, Trump claimed mortgage rates are starting to fall, even without help from the Fed.
“If I had the help of the Fed, it would be easier, but that jerk will be gone soon,” Trump said, referring to Powell. He added, “When the market goes up, they should lower rates.” Earlier, Trump had posted on Truth Social, celebrating the inflation data.
“Great (LOW!) Inflation numbers for the USA. That means that Jerome ‘Too Late’ Powell should cut interest rates, MEANINGFULLY!!! If he doesn’t, he will just continue to be, ‘TOO LATE!’” he wrote. Powell has served as Fed chair since 2018. Trump himself nominated him during his first term.
Inflation still above target, Fed unlikely to move
While inflation has cooled significantly from its peak, it is still higher than the Fed’s goal. Inflation last dropped below 2% back in February 2021.
Prices hit a high of 9.1% in June 2022 before gradually easing. In April 2025, inflation fell to 2.3%, the lowest level in four years. But it later climbed back up, touching 3% by September, as businesses passed higher costs from Trump-era tariffs on to consumers.
The December report shows inflation remains well above the Fed’s target, and markets do not expect policymakers to follow Trump’s calls for immediate rate cuts. According to the CME FedWatch tool, there is a 97.2% chance the Fed will keep interest rates unchanged at its next meeting, holding them in the 3.5% to 3.75% range. That expectation has grown stronger in recent days.
World’s top central bankers rally behind Powell
Central bank leaders from around the world have now stepped in to defend Powell and the independence of the Federal Reserve. The heads of institutions, including the Bank of England, the European Central Bank and the Bank of Canada, were among 11 senior bankers who signed a joint statement supporting Powell.
“Chair Powell has served with integrity, focused on his mandate and an unwavering commitment to the public interest,” they said.
They added that political pressure on central banks is dangerous. “The independence of central banks is a cornerstone of price, financial and economic stability in the interest of the citizens that we serve,” the statement said. “It is therefore critical to preserve that independence, with full respect for the rule of law and democratic accountability.”
They also said Powell is “a respected colleague who is held in the highest regard by all who have worked with him.”
Justice Department probe adds fuel to tensions
Trump’s criticism of Powell comes as the Justice Department is investigating whether the Fed chair lied to Congress about renovations at the Federal Reserve’s headquarters.
Powell revealed last week that federal prosecutors have issued subpoenas related to the probe. In a video statement released Sunday, he said the investigation was being used as pressure on the central bank. “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” Powell said.
“This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions – or whether instead monetary policy will be directed by political pressure or intimidation,” he added.