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By Shane Croucher
Senior Editor
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Commerce Secretary Howard Lutnick accused Federal Reserve Chair Jerome Powell of ignoring the Trump administration's tariff revenue and said inflation is consistently low enough that he should cut interest rates.
Powell testified to Congress on Tuesday that while the inflation situation is positive, the Fed is waiting to see what impact President Donald Trump's tariffs have on prices before making a decision to cut interest rates. Moving too soon could fuel inflation.
He has come under repeated fire from Trump, who believes Powell's Fed is holding back the American economy and costing it more in debt repayments than is necessary because interest rates are higher than they should be.
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"What he avoids discussing is the incredible revenue increase the U.S. has received from these tariffs," Lutnick said in a Wednesday morning post on X.
"Our current run rate exceeds $30 billion per month. $30 billion per month in cash received by the US Treasury to reduce our deficit and lower the amount we need to borrow."
Lutnick argued that the mix of low inflation, tariff revenues and lower interest rates is "win, win, win" because it would "reduce our deficit by dropping our borrowing costs, and will spur economic growth which drives tax revenues even higher."
"That's why President Trump calls Powell a loser. Because Powell would rather ignore the tariff revenues and keep U.S. rates the highest in the world (for a first-class country) because he's afraid to act," Lutnick said.
He added: "Jerome Powell—your job is to help Americans not hurt them, so do your job and CUT our absurdly high Interest rates at your next meeting."
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Powell Expects Inflation, Holding Fire on Rates
At the hearing, several Republicans asked Powell why the central bank has yet to lower borrowing costs.
Powell responded that most economists, inside and outside the Fed, still expect tariffs to push inflation higher, and Fed policymakers want to see what happens over the next couple of months before making any changes.
"We do expect tariff inflation to show up more," Powell said. "We really don't know how much of that's going to be passed through the consumer. We have to wait and see."
Under questioning, Powell acknowledged that tariffs might not push up inflation as much as economists forecast.
That, he said, could lead the Fed to reduce rates more quickly. A sharp rise in the unemployment rate could also spur the Fed to cut borrowing costs more quickly, he said.
"We could see inflation come in not as strong as we expect," he said. "And if that were the case, that would tend to suggest cutting sooner." But when asked specifically about July, Powell declined to comment.
Powell also said he expected to see tariffs' impact on prices emerge in the next few months, starting in June. The June inflation report will be released July 15.
This article includes reporting by The Associated Press.
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