On March 24, 2025, U.S. President Trump once again "fired" at the Federal Reserve at a cabinet meeting, bluntly saying that "prices and energy prices are falling" and urging the central bank to cut interest rates as soon as possible to stimulate the economy.The remarks continued his usual monetary policy stance and marked a further escalation of policy differences between the White House and the Federal Reserve.

Just five days ago (March 19), the Federal Reserve just announced that it would keep the target range of the federal funds rate unchanged at 4.25%-4.50%, lowered its forecast for this year's GDP growth to 1.7%, and raised its core PCE inflation forecast to 2.8%.This decision was interpreted by the market as the Federal Reserve's cautious wait-and-see response to the rising risk of "stagflation", but it became the trigger for a new round of pressure from Trump.

From the perspective of policy logic, Trump's call for interest rates is closely tied to his economic agenda.

On the one hand, he tried to hedge the impact of his tariff policy on the economy by cutting interest rates.Since the beginning of 2025, the U.S. government has imposed additional tariffs on industrial metals, chips and other products from many countries, causing increased disruption in global supply chains.For example, copper prices exceeded US$10,000 per ton due to trade protection policies, triggering a global rush to ship copper materials. Technology companies such as Nvidia were forced to adjust their supply chain strategies and plan to spend hundreds of billions of dollars to purchase U.S. chips to avoid risks.Trump believes that the increase in costs caused by tariffs requires loose monetary policy. He bluntly stated on social media that "the impact of tariffs has penetrated the economy" and that interest rates are "the right thing to do."

Trump, on the other hand, is trying to create a narrative of economic prosperity ahead of the 2025 election.Although the Atlanta Fed predicted that U.S. GDP may contract by 1.8% in the first quarter, Trump insisted that "falling prices" proved that the economy is still resilient and tried to attribute the fall in inflation to his own policies, while blaming the Fed's "inaction" for weak growth.

However, under Powell's narrative logic, the Fed's decision-making framework is clearly more focused on data than on political pressure-the March meeting statement deleted the expression "balance of employment and inflation target risks" and instead emphasized "increased uncertainty in the economic outlook." This reflects policymakers 'cautious attitude towards the current complex situation.

From the perspective of economic fundamentals, the United States is facing the dual challenges of "high inflation resilience" and "declining growth momentum": although the core PCE growth rate is still as high as 2.8% year-on-year, consumer confidence continues to decline due to tariffs and fiscal tightening, and manufacturing investment is affected by High interest rates are suppressed and companies are reluctant to expand production.This "stagflation-like" feature puts traditional monetary policy in a dilemma-if interest rates are cut to stimulate growth, it may aggravate inflation expectations; if interest rates are maintained high, it may accelerate economic stall.

Federal Reserve Chairman Powell tried to balance the two risks at a press conference, calling tariff inflation "temporary" but admitting it could delay the achievement of the 2% inflation target.This vague statement not only reserves flexibility for policy, but also exposes differences within the Federal Reserve on the economic outlook.

The market's response to this game has been contradictory.After the Federal Reserve announced that it would not move, the three major U.S. stock indexes once rebounded, with the Dow rising 0.92% in a single day, which was interpreted as a short-term response to Powell's conciliatory words.But deeper anxiety has not dissipated: gold prices broke through a record high of $3050 per ounce, reflecting rising risk aversion; and the energy sector became the only sector in the S & P 500 to rise, highlighting the shift from highly valued technology stocks to anti-inflation-fighting assets.It is worth noting that the interest rate futures market has bet on cutting interest rates at least twice during the year, which is a subtle mismatch with the guidance of the Federal Reserve's dot chart. This expected difference may become an important source of market volatility in the future.

Historical experience shows that the policy tussle between the White House and the central bank often exacerbates market uncertainty.During his first term, Trump repeatedly publicly criticized the Federal Reserve for raising interest rates and even considered removing Powell. This interference in the central bank's independence has aroused concerns among academic circles.At present, the focus of the contradiction between the two has shifted from "whether to cut interest rates" to "when and how hard to cut interest rates."Federal Reserve official Williams recently stated that "monetary policy is in good shape", implying that it will not turn easily in the short term.However, if economic data continues to deteriorate, such as the unemployment rate exceeding the forecast ceiling of 4.4%, the Fed may be forced to cut interest rates early if inflation fails to meet the target.