President Donald Trump is badgering the Federal Reserve to cut interest rates, but even if the Fed gave in to the pressure, it wouldn’t necessarily lead to lower borrowing costs for consumers.

In fact, economists say, Trump’s ongoing attacks on Fed Chair Jerome Powell and his tariff policies could keep the longer-term interest rates that matter for consumers and businesses higher than they otherwise would be. A less-independent Fed can lead, over time, to higher borrowing costs, as investors worry that inflation may spike in the future. As a result they demand higher yields to own Treasury securities.

Trump has repeatedly urged Powell to cut the short-term interest rate that the central bank controls. The Fed typically reduces its rate during an economic downturn to encourage more borrowing and spending, and raises it to cool the economy and fight inflation when prices rise.

But long-term rates on things like mortgages, auto loans, and credit cards are largely set by market forces. And in recent weeks, fears that Trump’s sweeping tariffs could raise inflation, along with the administration’s threats to the Fed’s independence, have led markets to push those longer term rates higher. It’s not clear that the Fed can fully reverse those trends by itself.

“It’s not automatically true that even if the Fed were to cut rates, that you would see a measured decline in long-term interest rates,” Francesco Bianchi, an economist at Johns Hopkins University, said. “This kind of pressure on the Fed might backfire…if markets don’t believe the Fed has inflation under control.”

Trump renewed calls on Wednesday and Thursday for Powell to reduce the Fed’s short-term rate, telling reporters that the chair is “making a mistake” by not doing so.

And last week, Trump suggested he could fire Powell, while a top aide said that the White House was “studying” whether it could do so.

Stock markets plunged in response, the yield on the 10-year Treasury bond rose, and the dollar fell, an unusual combination that suggested investors were selling most American assets. Markets recovered those losses after Trump said on Tuesday that he had “no intention” of firing the Fed chair.

Still, the threats to the Fed’s independence unnerved Wall Street investors, because they see a Fed free from political pressure as critical to keeping inflation in check. An independent Fed can take unpopular steps, such as raising rates, to fight inflation.

“Threatening the Fed doesn’t soothe markets — it spooks them,” said Lauren Goodwin, chief market strategist at New York Life Investments. “And the result is often the opposite of what any administration wants to see: higher rates, weaker confidence, and more market turmoil.”

Since Trump began imposing tariffs in early March, when he slapped duties on Canada and Mexico, the 10-year Treasury yield has risen from 4.15% to about 4.3%. The yield is a benchmark for mortgage rates and other borrowing. Mortgage rates, in turn, have increased during that time, from 6.6% to 6.8%.

While Trump says he is negotiating over tariffs with many countries, most economists expect some level of duties to remain in place for at least this year, including his 10% duties on nearly all imports.

The 10-year yield did fall Thursday when two Federal Reserve officials said that rate cuts are possible as soon as this summer, should the economy falter and unemployment rise.

Yet last fall, longer-term interest rates also fell in anticipation of rate cuts, but then rose once the Fed cut in September and then continued to rise as the central bank reduced its rate again in November — two days after the election — and in December. Mortgage rates are now higher than they were when the Fed cut.

A range of factors can affect longer-term Treasury rates, including expectations for future growth and inflation, as well as the supply and demand for government bonds. Bianchi worries that stubbornly high government budget deficits — which are financed by trillions of dollars of Treasurys — could also lift long-term rates.

Should the Fed cut rates now, llonger-term borrowing costs “would move in the opposite direction, absolutely,” Goodwin said, “because the threat of inflation is so palpable — that move would call their credibility into question.”

Trump said in a social media post this week that there is “virtually No Inflation” and as a result, the Fed should lower its key rate, from its current level of about 4.3%. Many economists expect the central bank will do so this year. But Powell has underscored that the central bank wants to evaluate the impact of Trump’s policies before making any moves.

Inflation has fallen in recent months, dropping to 2.4% in March, the lowest level since last September. Yet excluding the volatile food and energy categories, core inflation was 2.8%. Core prices often provide a better signal of where inflation is headed.

A key issue for the Fed is that the economy is very different now than it was during Trump’s first term. Back then inflation was actually below the Fed’s target. At that time, it was a “no-brainer” to cut rates, Bianchi said, if there was a threat of a recession, because inflation wasn’t an issue.

But now, tariffs will almost certainly lift prices in the coming months, at least temporarily. That raises the bar much higher for a Fed rate cut, Bianchi said.

Still, once there are clear signs the economy is deteriorating, such as a rising unemployment rate, the Fed will cut rates, regardless of what Trump does, economists said.

Trump on Monday accused Powell of often being “too late” with his rate decisions, but ironically the Fed may move more slowly this time because of the threat of higher prices from tariffs. Without clear evidence of a downturn, Fed officials would worry about being seen as giving in to political pressure from Trump if they cut.

“Powell knows the irreparable damage that would occur if it was perceived that he cut because he was forced to by Trump,” said Tom Porcelli, chief U.S. economist at PGIM Fixed Income.

The Fed now “will be even more delayed because I think you’re going get more of an inflation lift initially, before you get the more pronounced slowing in growth,” Porcelli said.

Either way it may take more than a Fed cut or two to bring down longer-term borrowing costs, Bianchi said.

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

WASHINGTON — The outlooks for the U.S. and global economies have significantly worsened in the wake of President Donald Trump’s tariffs and the uncertainty they have created, the International Monetary Fund said Tuesday.

The IMF said that the global economy will grow just 2.8% this year, down from its forecast in January of 3.3%, according to its latest World Economic Outlook. And in 2026, global growth will be 3%, the fund predicts, also below its previous 3.3% estimate.

U.S. economic growth will come in at just 1.8% this year, down sharply from its previous forecast of 2.7% and a full percentage point below its 2024 expansion. The IMF doesn’t expect a U.S. recession, though it has raised its odds of one this year from 25% to 37%.

The forecasts are largely in line with many private-sector economists’ expectations, though some do fear a recession is increasingly likely. Economists at JPMorgan say the chances of a U.S. recession are now 60%. The Federal Reserve has also forecast that growth will weaken this year, to 1.7%.

“We are entering a new era,” Pierre-Olivier Gourinchas, chief economist at the IMF, said. “This global economic system that has operated for the last eighty years is being reset.”

The IMF is a 191-nation lending organization that works to promote economic growth and financial stability and to reduce global poverty.

Gourinchas said that the heightened uncertainty around the import taxes led the IMF to take the unusual step of preparing several different scenarios for future growth. Its forecasts were finalized April 4, after the Trump administration announced sweeping tariffs on nearly 60 countries along with nearly-universal 10% duties.

Those duties were paused April 9 for 90 days. Gourinchas said the pause didn’t substantially change the IMF’s forecasts because the U.S. and China have imposed such steep tariffs on each other since then.

The uncertainty surrounding the Trump administration’s next moves will also likely weigh heavily on the U.S. and global economies, the IMF said. Companies may pull back on investment and expansion as they wait to see how the trade policies play out, which can slow growth.

China is also forecast to grow more slowly because of U.S. tariffs. The IMF now expects it will expand 4% this year and next, down roughly half a point from its previous forecasts.

While the U.S. economy will likely suffer a “supply shock,” similar to what hampered during the pandemic and which pushed up inflation in 2021 and 2022, Gourinchas said, China is expected to experience reduced demand as U.S. purchases of its exports fall.

Inflation will likely worsen in the United States, rising to about 3% by the end of this year, while it will be little changed in China, the IMF forecast.

The European Union is forecast to grow more slowly, but the hit from tariffs is not as large, in part because it is facing lower U.S. duties than China. In addition, some of the hit from tariffs will be offset by stronger government spending by Germany.

The economies of the 27 countries that use the euro are forecast to expand 0.8% this year and 1.2% next year, down just 0.2% in both years from the IMF’s January forecast.

Japan’s growth forecast has been marked down to 0.6% this year and next, 0.5% and 0.2% lower than in January, respectively.

WASHINGTON — Federal Reserve Chair Jerome Powell said Wednesday that President Donald Trump’s calls for lower interest rates won’t lead the central bank to change its rate decisions.

“People can be confident that we’ll continue to keep our heads down, do our work, and make our decisions based on what’s happening in the economy,” Powell said, under questioning from members of the House Financial Services Committee. Powell spoke on the second day of his semiannual testimony to Congress.

Earlier Wednesday, Trump said on social media that “Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!!!”

Yet Powell indicated during a press conference last month that the Fed, after cutting its key rate three times late last year, would hold off on further cuts as it waited for evidence that inflation is moving closer to its 2% target.

And many Fed officials want to wait and see how Trump’s policies, including the tariffs he has proposed and those he has put in place, affect the economy. Most economists worry that tariffs will at least temporarily push up inflation.

On Wednesday, the government reported that inflation picked up last month, with consumer prices rising 3% in January from a year earlier, up from a 3 1/2 year low of 2.4% in September. The uptick makes it even less likely the Fed will cut its key rate anytime soon. The Fed’s rate influences borrowing costs throughout the economy, including mortgages, auto loans, and credit cards.

The Fed cut its key rate three times last year, to about 4.3% from 5.3%, but said in January that it would keep its rate unchanged until inflation declined further. Fed officials in December had forecast that they would implement two cuts this year, but some economists now think the Fed may be on hold all year.

HONOLULU — Hawaii lawmakers began a new legislative session Wednesday with a vow to try to stabilize the state’s property insurance market as hurricanes, wildfires and other climate change-influenced disasters at home and elsewhere prompt insurance carriers to raise rates.

Hurricanes in Florida and North Carolina and wildfires in California affect the insurance business in Hawaii because insurance companies buy reinsurance — insurance for themselves — on the global market. As reinsurance rates rise in response to these disasters, some insurers want to charge more in Hawaii or stop providing insurance in the islands.

Insurance companies had increasingly been viewing Hawaii as a disaster risk state even before the August 2023 wildfires on Maui, but that event only intensified the trend, Senate President Ron Kouchi told reporters at a news conference.

The emergence of multiple large wildfires that have destroyed thousands of structures in and around Los Angeles over the past week have made matters worse. A preliminary estimate last week by AccuWeather, a private company that provides data on weather and its impact, put damage and economic losses from the fires between $135 billion and $150 billion, likely the costliest in U.S. history.

The current situation is “incredibly complicated and dynamic,” said state Sen. Jarrett Keohokalole, chair of the Senate Commerce and Consumer Protection Committee.

“We don’t have any certainty, for example, on what the fires in Los Angeles are going to cause in the insurance market, in part because the fires are not even extinguished yet,” he said.

“It’s unclear at this point whether we’re at the bottom or things could get worse,” the Democrat said. “What we can expect is that these larger and larger scale disasters are going to continue to increase in frequency, and we need to be prepared for it.”

Senate Democrats will propose restarting programs started after Hurricane Iniki hit Kauai in 1992 and upended property insurance for years after. At the time, the state created a fund to provide hurricane insurance to residents.

The Hawaii Hurricane Relief Fund created after Iniki provided hurricane coverage to 155,000 policyholders statewide for a decade until private insurers returned to the market. The state paid for the fund through policyholder premiums, assessments on licensed property and casualty insurers, a special mortgage recording fee and a surcharge on premiums on policies issued by licensed property and casualty insurers.

The state authorized the director of finance to issue bonds to help the fund operate, but they were never issued.

Keohokalole said the state has limited resources and he couldn’t guarantee that such a program would lead to prices that homeowners are accustomed to. It’s important for Hawaii homeowners to be able to buy insurance locally, he said.

“We can’t expect kupuna on fixed incomes or families that are struggling right now to be able to pay whatever the market dictates globally, when Hawaii is a tsunami risk state, a wildfire risk state and a hurricane risk state,” he said, using the Hawaiian word for elders.

Longer term, he said lawmakers would need to discuss resiliency and fire safety measures homeowners can adopt so they’ll be better able to withstand disasters.

Hawaii condominium owners have been hit particularly hard by insurance market instability.

Testifiers before the Legislature last year said condo boards were increasingly choosing to reduce the amount of their insurance coverage because they couldn’t afford higher premiums. But Fannie Mae and Freddie Mac, which buy home loans from banks and other lenders, will only buy mortgages for units in buildings insured up to full replacement value. This makes banks unwilling to lend money to buyers of these condos.

One testifier said between 375 to 390 condominium buildings in Hawaii were underinsured for hurricane risk.

Keohokalole said it was imperative that lawmakers “deliver something” this session, which ends in May.

Kouchi, also a Democrat, noted that without insurance people wouldn’t be able to get a mortgage and would have to pay cash to buy a home. He said this would be a “tremendous impediment” to homeownership in a state where the median price of a single-family home is over $1 million in most counties.

The Los Angeles wildfires are also testing California’s insurance market, where major insurers have pulled back on property coverage as climate change makes wildfires, floods and windstorms more common and damaging.