Trump says he might call Powell to press for interest rate cuts

President Trump on Wednesday said he might call Federal Reserve chair Jerome Powell to press for an interest rate cut.Why it matters: Financial markets slumped when they feared Trump might fire Powell and threaten the Fed's independence, and rallied when he said he had "no intention" of doing so.But a threat to call and push directly for rate cuts could rekindle those fears about the central bank's freedom from political interference.What they're saying: "I might call him. I haven't called him, but I believe he's making a mistake by not lowering interest rates," Trump said in Oval Office remarks to reporters."He will hopefully do the right thing. The right thing is to lower interest rates."The big picture: Jawboning aside, no U.S. leader in the past half-century has taken the risk of trying to force the Fed to lower rates.The last to try was President Richard Nixon, who urged Fed chair Arthur Burns to keep monetary policy loose in the run-up to the 1972 election.That political pressure appeared to work at the time, but with disastrous consequences for inflation down the line.What to watch: Whether Trump actually calls Powell — and whether the staunchly independent Powell takes the call.

President Trump on Wednesday said he might call Federal Reserve chair Jerome Powell to press for an interest rate cut.Why it matters: Financial markets slumped when they feared Trump might fire Powell and threaten the Fed's independence, and rallied when he said he had "no intention" of doing so.But a threat to call and push directly for rate cuts could rekindle those fears about the central bank's freedom from political interference.

What they're saying: "I might call him. I haven't called him, but I believe he's making a mistake by not lowering interest rates," Trump said in Oval Office remarks to reporters."He will hopefully do the right thing.

The right thing is to lower interest rates."The big picture: Jawboning aside, no U.S.

leader in the past half-century has taken the risk of trying to force the Fed to lower rates.The last to try was President Richard Nixon, who urged Fed chair Arthur Burns to keep monetary policy loose in the run-up to the 1972 election.That political pressure appeared to work at the time, but with disastrous consequences for inflation down the line.

What to watch: Whether Trump actually calls Powell — and whether the staunchly independent Powell takes the call..