WASHINGTON — President Trump lacks official power to make the Federal Reserve cut interest rates, but he may have found a way to force its hand: stoking economic uncertainty.
The Fed’s chair, Jerome H. Powell, has signaled that he and his colleagues could cut interest rates at their upcoming meeting as inflation remains stubbornly low and risks, including Mr. Trump’s trade war with China, threaten economic growth. Mr. Powell, speaking in Paris on Tuesday, reiterated that the Fed would act as appropriate to sustain the economic expansion.
Mr. Trump continues to keep the Fed — and the world — on policy tenterhooks, saying on Tuesday at the White House that the United States had “a long way to go” in its ability to punish China with tariffs and suggesting that he could still impose levies on nearly all Chinese goods.
Mr. Trump said China was under no such pressure from its central bank, noting that President Xi Jinping was “his own Fed.”
“They’re pumping money into their system, and they’re lowering rates very substantially,” he said.
The White House’s assault on the central bank, underway for about a year now, is unlikely to directly influence Fed policy. But by roiling trade tensions, Mr. Trump is continuing to throw uncertainty into a global economy that is already struggling with weakened demand from China and a slowdown in manufacturing.
That, rather than his badgering, could force the Fed’s hand, helping to lock in a rate cut at its meeting on July 30 and 31.
Uncertainties about the economic outlook “have increased, however, particularly regarding trade developments and global growth,” Mr. Powell said in prepared remarks delivered in France, also emphasizing risks including the debt ceiling.
“We are carefully monitoring these developments and assessing their implications for the U.S. economic outlook and inflation, and will act as appropriate to sustain the expansion,” he said.
An interest-rate cut now could seem unusual, because unemployment is at a nearly 50-year low, growth is holding up and the stock market has recently touched record highs. While Mr. Trump regularly celebrates that economic progress, his trade policies could crimp the expansion.
The Trump administration has already placed tariffs on $250 billion of Chinese goods, and is threatening to impose them on another $300 billion of goods — practically all remaining imports from China — if the country does not meet America’s demands. Mr. Trump has also threatened auto tariffs on Europe and Japan, a move that would hit German carmakers particularly hard.
Cutting rates could provide an economic backstop and signal that central bankers are ready and willing to act should geopolitical risks escalate or persist, causing economic data to further sour. Because policy works at a lag, moving early and pre-emptively could offer perks.
“Trade uncertainties have helped to contribute to global growth deceleration,” Robert S. Kaplan, the president of the Federal Reserve Bank of Dallas, said in Washington on Tuesday, noting that many large American companies do business overseas and will suffer as a result. “We are not immune to spillovers from decelerating global growth.”
Mr. Kaplan has not made up his mind over whether a rate cut is needed, though he is “open” to discussing one. He said that if the Fed made a move, it should be “tactical” and “limited.”
Charles L. Evans, the president of the Federal Reserve Bank of Chicago, said at a CNBC event on Tuesday that “on the basis of inflation alone, I could feel confident in arguing for a couple of rate cuts before the end of the year.”
The accumulating risks come as inflation is already well below the Fed’s 2 percent goal. The central bank aims for low but steady price gains, which guard against deflation and give companies headroom to raise wages.
Fed officials have “raised concerns about a more prolonged shortfall in inflation below our 2 percent target,” Mr. Powell said on Tuesday.
Investors fully expect the Fed to cut rates at their July meeting, based on pricing in federal funds futures markets. The central bank’s pre-meeting quiet period starts Saturday, so their chances to change that perception are increasingly limited.
Mr. Powell also addressed the importance of shoring up trust in central banks at a time when “our audience has become more varied, more attuned to our actions and less trusting of public institutions.”
He said such trends meant that central bankers “must speak to Main Street, as well as Wall Street, in ways we have not in the past, and Main Street is listening and engaged.”
In Washington, his colleague Mr. Kaplan underlined the importance of central bank independence, saying that it allows monetary policymakers to ensure low unemployment and stable prices in the longer term — preventing short-term thinking that sacrifices comfort down the road for stronger growth today.
“A sign of a successful economy has been an independent central bank,” Mr. Kaplan said. “Independence has to be earned: It means you have to be susceptible to transparency, oversight.”