Trump’s attacks on Fed Chair Jerome Powell and calls to cut interest rates could backfire, economists say

President Donald Trump isBadgering the Federal ReserveTo cultivate interest rates, but even if the Fed surrendered to pressure, it does not need to lead to lower borrowing costs for consumers.

In fact, economists say, Trump'sContinue to attackto the fed chair Jerome Powell and hisTariff PoliciesIt can maintain longer interest rates that are important for consumers and businesses higher than otherwise. A less independent fed can lead, over time, at higher borrowing costs, as investors are concerned that inflation may spike in the future. As a result they demand increased yield in one's own security security.

Trump hasPowell repeatedly urgedTo cut short-term interest rate controlled by the central bank. The Fed usually reduces its rate during an economic collapse to encourage greater borrowing and spending, and raises it to cool the economy and fight inflation as prices rise.

But long -term rates on things likeMortgageAuto loans, and credit cards are mainly set by market forces. And in recent weeks, Trump's sweeping tariffs can increase inflation, with the administrationFed freedom threatsLeading markets to push longer rates. It is not clear that the Fed can completely reverse the trends by itself.

“It is not automatically true that even the Fed will cut rates, that you will see a measured decline in long -term interest rates,” said Francesco Bianchi, a economist at Johns Hopkins University. “This type of pressure on the Fed can backfire … If markets do not believe the Fed is in control of inflation.”

Trump renewed calls on Wednesday and Thursday to reduce Fed's short-term rate, telling journalists that the seat was “wrong” by not doing so.

And last week, Trumpsuggested he could burn PowellWhile a top aid says the White House is “studying” if it can be done.

Stock markets collapsed in response, the yield in the 10-year Bond of Treasury, and the dollar collapsed,an unusual combinationThe suggested investor sells most American ownership. Markets recovered losses after Trumpsaid on Tuesdaythat he was “no intention” of firing the fed chair.

However, Fed's freedom threats did not provide investors on Wall Street, as they see a Fed without political pressure as critical in keeping inflation check. An independent fed can take unpopular measures, such as increasing rates, to fight inflation.

“The threat to the Fed does not make the markets happy – it has taken them,” said Lauren Goodwin, chief strategist of the New York Life Investments market. “And the result is often the opposite of what any administration wants to see: higher rates, weaker confidence, and more market disturbance.”

Because Trump began the imposition of tariffs in early March, when he slapped the duties in Canada and Mexico, the 10-year harvest of the ark rose from 4.15% to about 4.3%. The yield is a benchmark for mortgage rates and other borrowing. Mortgage rates, in turn, increased at that time, from 6.6% to 6.8%.

While Trump says he is organizing tariffs in many countries, most economists expect some degree of duties that will remain in the area at least this year, including his 10% role in almost all imports.

The 10-year-old Ani fell on Thursday when two Federal Reserve officials said the rate cuts were possible once this summer, the economy should rise and unemployment increases.

But last autumn, the longer interest rates also fell in the hope of the rate cuts, but then increased once theFed cut in SeptemberAnd then continued to rise as the central bank reduced its rate again in November – two days after the election – andIn December. Mortgage rates are now higher than when they were cut by the Fed.

A range of factors can affect longer treasury rates, including expectations for growth and inflation, as well as supply and demand for government bonds. Bianchi is concerned that the tough high government budget shortage-funded by trillion dollars of treasurys-can also lift long-term rates.

If the fed cut rates today, the costs of borrowing the longer-term “will move in the opposite direction, completely,” Goodwin said, “because inflation threats are freed-that move will call their credibility.”

Trump said in a social media post this week that there was “almost no inflation” and as a result, the Fed should lower its key, from the current level of about 4.3%. Many economists are hoped that the Central Bank will do this this year. But Powell emphasizes that the Central Bankwould like to check the impactof Trump's policies before making any motions.

Inflation has fallen in recent months, declining 2.4% in March, the lowest level since last September. But excluding Pabagu -Change of food and energy categories, the main inflation is 2.8%. The basic prices often provide a better signal where inflation is dominated.

One major issue for Fed is that the economy is different now than during Trump's first term. Back after inflation is actually below Fed's target. At that time, it was a “no-brainer” to cut rates, Bianchi said, if there was a threat of a contraction, because inflation was not an issue.

But now, tariffs are almost certain to raise prices in the coming months, at least temporarily. It raised the bar higher for a fed rate cut, Bianchi said.

However, once there are clear signs that the economy worsens, such as a rising unemployment rate, the Fed will reduce rates, whatever Trump does, economists said.

Trump on Monday accused Powell of often “late” at his rate decisions, but ironically the Fed could move more slowly at this time due to the threat of higher prices from tariffs. Without clear evidence of a collapse, Fed officials will remember what to see as giving political pressure from Trump if they cut off.

“Powell knows the unreasonable damage will occur if he realizes that he cut off because Trump forced him,” said Tom Porcelli, the US chief economist in PGIM's fixed income.

Today's Fed “is even more delayed because I think you will get more than one inflation at first, before you get the more pronounced slowing down,” Porcelli said.

Either way that can take more than one fed cut or two to drop longer borrowing costs, Bianchi said.

“To really lower the long-term rates you need to provide a stable macroeconomic environment, and now we are not there,” he added.

This story was originally featured on Fortune.com