The US Federal Reserve’s preferred inflation gauge registered a slight increase on Friday, coinciding with a weakening in consumer spending. This data prompted renewed criticism from President Donald Trump directed at the central bank’s chair for not implementing earlier interest rate cuts.
“We have a guy that’s just a stubborn mule and a stupid person,” President Trump declared at a White House event, referring to Fed Chair Jerome Powell. He added, “He’s making a mistake.”
With Chairman Powell’s term as Fed chief concluding next year, Trump hinted at his preference for a successor, stating, “I’m going to put somebody that wants to cut rates.”
The President’s remarks followed government data indicating that the Personal Consumption Expenditures (PCE) price index rose by 2.3 percent last month in May, year-over-year. This figure aligned with analyst expectations and marked a marginal acceleration from April’s 2.2 percent increase, yet remained a relatively mild uptick. Excluding the volatile food and energy sectors, the core PCE price index advanced by 2.7 percent, up from April’s 2.6 percent rise, as reported by the Commerce Department.
However, consumer spending saw a decline, reflecting the impact of President Trump’s fresh tariffs imposed in April, which dragged on consumer sentiment. PCE dropped by 0.1 percent from the preceding month, reversing an earlier upward trend.
While President Trump has implemented sweeping tariffs on most US trading partners since his return to the White House in January—alongside higher duties on imports of steel, aluminum, and automobiles—these measures have had a muted effect on inflation so far. This is partly attributed to the President’s decision to hold off or postpone some of his most stringent tariff actions, and businesses continuing to deplete inventory stockpiled in anticipation of the levies.
Despite this, central bank officials have not rushed to cut interest rates, asserting that they can afford to wait to gather more information on the impact of President Trump’s recent duties. They anticipate gaining further insights into the tariffs’ effects over the summer.
