Trump Urges Fed Rate Cuts During Visit With Powell
U.S. President Donald Trump has once again advocated for the Federal Reserve to lower interest rates. This time, the request was made during a visit to the U.S. Central Bank, where he met with Chair Jerome Powell.
Trump's Renewed Push for Rate Cuts
During his visit to the Federal Reserve, President Trump expressed his desire for Fed Chair Jerome Powell and the FOMC to decrease interest rates. This statement was made while touring the renovation project at the U.S. Central Bank.
Trump pointed out that the European Union (EU) has already implemented multiple interest rate cuts. In contrast, the Fed has not made any rate cuts this year, despite three successive cuts last year.
He suggested that the U.S. should aim for the lowest interest rates globally, noting Switzerland's 0.50% as a benchmark. Trump called for a 300-basis-point rate cut to align with this level, arguing that a robust economy with low inflation and a strong labor market would benefit from such a move.
The president believes that a rate cut could serve as “rocket fuel,” propelling the economy to new heights.
This visit occurs amid growing pressure on Jerome Powell, particularly concerning the renovation project's costs. Rep. Anna Paulina Luna recently referred the Fed Chair to the DOJ for potential perjury related to these costs.
Speculation has arisen regarding Powell's possible resignation or termination by Trump due to alleged fraud. Some reports even falsely indicated Powell's resignation earlier in the week.
No Plans to Dismiss Powell
Trump reiterated that he has no intention of firing Powell, though he believes the Fed Chair has been “too late” in implementing rate cuts. Acknowledging the potential risk to the Fed’s independence, Trump described firing Powell as a “big move.”
He conveyed confidence that Powell would “do the right thing,” emphasizing that there is no explicit pressure but a general understanding of the appropriate course of action. According to Trump, even previous advocates of higher rates now support lower interest rates.
Recently, Fed President Mary Daly conceded that the tariffs imposed by Donald Trump have not negatively impacted inflation as much as initially expected. Daly has indicated that two rate cuts this year would be a reasonable outlook.
Currently, the Fed is expected to maintain interest rates at the upcoming July FOMC meeting. CME FedWatch data indicates a 97.4% probability that rates will remain within the 4.25% to 4.5% range.
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