- Rising conflict between Israel and Iran drives renewed interest in gold as a geopolitical safe haven.
- Inflation concerns and uncertainty over tariff impacts are keeping the Fed in a wait-and-see stance.
- With rate cuts likely later this year, now is the time to protect your finances with physical gold.
A Showdown Between the White House and the Fed
The economy is on edge as a major policy clash unfolds at the highest levels of government. President Donald Trump wants immediate rate cuts to ward off a future downturn. Federal Reserve Chair Jerome Powell is refusing to budge. Their disagreement has sparked a broader debate: should we act now to protect the economy, or wait until the damage is already done?
This tug-of-war between proactive and reactive policy has real consequences for markets and for your money. With interest rate cuts still likely later this year, many are turning to gold now, before the landscape shifts.
Powell’s Cautious Approach
Despite pressure from President Trump, Jerome Powell has made it clear: the Fed is not ready to cut rates. Powell continues to emphasize the central bank’s dual mandate of low inflation and full employment, warning that price stability is the foundation of sustained economic strength.
Currently, inflation remains above the Fed’s 2% target. Powell expects the Fed’s preferred measure of inflation to rise to 2.3% in May, with core inflation—excluding food and energy—ticking up to 2.6%. For now, Powell sees a strong labor market and decent economic growth as reasons to keep policy steady. The Fed’s benchmark interest rate remains in a restrictive range of 4.25% to 4.50%, where it has been since December 2024.1
Even Powell acknowledged that rates may be too restrictive in hindsight. But said he’s not ready to change course yet. “If you just look in the rear-view mirror and look at the existing data we’ve seen, you can make a good argument that would call for us to be at a neutral level,” he said. “The reason we’re not is that…we do expect a meaningful increase in inflation over the course of this year.”3
Trump Wants Action Now
President Trump sees it differently. He has called for aggressive cuts of “at least” two to three percentage points, saying that lower rates now would save the country $800 billion annually and help avoid a future crisis.
Frustrated with the Fed’s refusal to act, Trump has repeatedly criticized Powell, calling him a “very dumb, hardheaded person” and accusing him of holding the economy back. “No inflation, great economy—We should be at least two to three points lower,” Trump wrote in a Truth Social post.4
Trump’s message is simple: don’t wait for things to go wrong. Cut rates now while the economy is strong and increase them later if needed.
Tariffs and Inflation: The Fed’s Sticking Point
One of the key reasons the Fed hasn’t moved is concern over President Trump’s own policies, specifically, tariffs. Powell has said that if not for the inflation risk tied to the President’s April 2 tariff hikes, the Fed “would have likely already lowered interest rates.”
The inflationary effects of tariffs, Powell said, are expected to show up in June and July’s data. “We do expect to show up—tariff inflation to show up more,” he told Congress. “But…we really don’t know how much of that’s going to be passed through to the consumers… It could be lower than we expect; it could be higher. We have to wait and see.”5
That uncertainty is driving the Fed’s wait-and-see approach.
Not All Fed Officials Agree
While Powell remains cautious, some Fed officials are warming to the idea of cuts. Seven believe rates will hold steady this year, but ten support two or more cuts. Two governors, Christopher Waller and Michelle Bowman, have said they could support a cut at the next meeting in July if inflation continues to ease or the labor market weakens.
New York Fed President John Williams described rates as “modestly restrictive” and appropriate for now. Atlanta Fed President Raphael Bostic added that the U.S. has “space and time” to determine the right path, especially since businesses are already adjusting to global supply disruptions.
Cuts Are Likely—Just Not Yet
Markets aren’t expecting a rate cut in July. According to the CME FedWatch Tool, there’s only an 18.6% chance of a cut then. But the probability jumps to 87% by September. In short: cuts are still coming, it’s just a matter of when.6
That timing matters for investors. Lower interest rates can weaken the dollar, drive inflation expectations higher, and make gold more attractive. If the Fed waits too long, the economic damage may already be underway. If they cut too soon, they risk reigniting inflation.
Conclusion
Whether you side with President Trump’s proactive stance or Powell’s cautious approach, one thing is certain: volatility is coming. Gold has long been a hedge against inflation, currency risk, and monetary uncertainty. And when the Fed eventually does cut rates, gold often responds by climbing in value.
Contact American Hartford Gold at 800-462-0071 to learn how holding physical precious metals in a Gold IRA can help protect your wealth. You don’t need to wait for the first rate cut to make a move, position yourself now, while the opportunity is clear.
