Pressure is mounting on the Federal Reserve from both the markets and President Trump to consider cutting interest rates in the near future, especially as the tariff market downturn intensifies. Traders are increasingly anticipating up to five rate cuts this year and foresee the possibility of cuts starting as soon as the upcoming May meeting, with the likelihood of a May cut now exceeding 50%.

President Trump has been vocal in pushing for rate cuts, urging Fed Chair Jerome Powell to act swiftly. Despite Trump's calls for rate cuts, Powell indicated during a recent event that the Fed is not rushing to make any rate adjustments, emphasizing that it is premature to determine the appropriate monetary policy path.

Powell also expressed concerns about potential higher inflation and slower economic growth resulting from Trump's tariffs. This is in contrast to previous assumptions that any inflation impacts would be temporary. The Federal Reserve faces a challenging situation as it aims to balance maximizing employment and maintaining stable prices, which could be at odds if the tariffs have the adverse effects predicted by some economists.

Despite the uncertainty caused by tariff developments, recent job creation figures have exceeded expectations, with 228,000 new jobs added in March. The unemployment rate saw a minor increase to 4.2%. The upcoming release of the Consumer Price Index for March will provide further insights into the inflation situation.

Powell highlighted the importance of obtaining more clarity before making any adjustments to the Fed's policy stance, indicating a cautious approach moving forward.