From Yahoo Finance: 2025-04-28 12:19:00

A war of words over inflation and tariffs doesn’t guarantee a quick drop in interest rates, even as Trump insults the Federal Reserve chairman. Wall Street sees a significant selloff, with the Dow heading for its worst April since 1932. Trump’s threats of firing Powell add to market unrest.

The Federal Reserve isn’t expected to cut rates at the upcoming May meeting, aiming to balance employment and price stability. The Fed can raise rates to curb inflation or cut them to stimulate the economy. Uncertainty over the trade war could delay any rate changes for months.

Trump’s attacks on Fed independence have investors on edge, fearing higher inflation. The history of presidents meddling with the Fed, like Nixon, shows long-term consequences for the economy. Savers can expect rates to stay steady, with potential cuts later in the year due to economic damage from tariffs.

Despite Trump’s threats, Powell remains in his position until his term ends in 2026. The Fed operates independently and bases decisions on economic data, not political pressure. Trump’s criticism of Powell could be a strategy to deflect blame for any economic downturn linked to the trade war.

The uncertainty surrounding the trade war and Fed policies contributes to market volatility. Savers can find decent rates on CDs, although not as high as before. Keeping an eye on inflation and rate changes is crucial for financial planning in a turbulent economy.

Read more: Why interest rates won’t budge anytime soon