Commerce Secretary Lutnick Criticizes Fed's 4.25%-4.5% Rate Amidst Tariff Revenue Debate

Washington D.C. – U.S. Secretary of Commerce Howard Lutnick has publicly assailed Federal Reserve Chair Jerome Powell and the central bank's decision to maintain high interest rates, arguing that current economic conditions, including substantial tariff revenues, warrant a reduction. Lutnick, a prominent figure in the Trump administration, expressed his concerns via a social media post, highlighting a perceived disconnect between the Fed's monetary policy and the nation's economic reality.

In his tweet, Lutnick stated: > "Why do we have one of the highest central bank rates in the world? We have a roaring economy, low inflation, trillions of dollars in new investment, and $88 billion in tariff revenue. Jerome Powell is a member of the “expert class,” which has been wrong about Trump at every turn. This situation is very sad for our country. Both Powell and the board should be ashamed of themselves."

The Federal Reserve's Monetary Policy Report for June 2025 indicates that the Federal Open Market Committee (FOMC) has kept the target range for the federal funds rate steady at 4.25% to 4.5% for the fourth consecutive meeting. The report notes that inflation has continued to moderate, with the Personal Consumption Expenditures (PCE) price index rising 2.1% over the 12 months ending in April, and core PCE at 2.5%. However, the Fed remains cautious, citing concerns about the potential inflationary impact of recent tariffs.

While Lutnick points to a "roaring economy" and "trillions of dollars in new investment," economic analyses offer a more nuanced picture. The Federal Reserve's report acknowledges that real Gross Domestic Product (GDP) edged down in the first quarter of 2025, partly due to a surge in imports ahead of anticipated tariff increases. Forecasts from institutions like EY and BNP Paribas suggest a slowdown in US economic growth for the latter half of 2025, with real GDP growth projected to decelerate from 2.8% in 2024 to around 1.5% in 2025, partly due to tariff effects and policy uncertainty.

The Commerce Secretary's emphasis on "trillions of dollars in new investment" and "low inflation" contrasts with the Fed's stance, which prioritizes a "wait-and-see" approach to ensure inflation sustainably returns to its 2% objective. The Fed's report highlights that measures of shorter-term inflation expectations have moved higher this year, reflecting concerns around tariffs, even as longer-term expectations remain anchored. This divergence underscores the ongoing debate within economic circles regarding the optimal path for U.S. monetary policy amidst evolving trade dynamics.