Politics
In a recent social media post, U.S. President Donald Trump advocated for lowering interest rates, suggesting that such a move would complement his upcoming tariffs. This stance marks another shift in Trump's stance on monetary policy, as he continues to pressure the Federal Reserve despite lacking direct authority over the central bank.
Trump's comments on Truth Social emphasized the need for lower interest rates, stating, "Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!!! Lets Rock and Roll, America!!!" This comes a day after Federal Reserve Chair Jerome Powell indicated that policymakers are not in a rush to lower rates, focusing instead on monitoring inflation progress.
Powell, appearing before the House Financial Services Committee, maintained his stance that the Fed will continue to make decisions based on economic conditions, unaffected by statements from elected officials. When asked if comments from elected officials influence Fed decisions, Powell replied, "That’s correct," reinforcing the central bank's independence.
Trump's call for lower interest rates reflects a broader narrative shift from the White House. Initially, Trump demanded immediate rate cuts after taking office, but later supported the Fed's decision to hold rates steady. More recently, Treasury Secretary Scott Bessent emphasized the administration's focus on reducing the 10-year Treasury yield rather than the short-term fed funds rate.
However, Trump's latest statement signals a return to pressuring the Fed to ease monetary policy. Market expectations currently suggest that the Fed will maintain its current stance until at least June or July, with some economists predicting no rate cuts for the remainder of the year. This outlook was reinforced by the Bureau of Labor Statistics' report of higher-than-expected consumer price increases in January, which solidified expectations that the Fed will not act until at least September.
Source:
Jeff Cox, CNBC https://www.cnbc.com/2025/02/12/trump-says-interest-rates-should-be-lowered-to-go-hand-in-hand-with-his-tariffs.html
Image Credit: Kevin Lamarque | Reuters