2 weeks Ago
United States President Donald Trump on Thursday said he may speak to Federal Reserve Chairperson Jerome Powell about lowering interest rates to support the country’s economy. Speaking to reporters, Trump indicated that he might reach out to the Fed Chair to advocate for a rate cut, Reuters reported. "I might call him.
I haven't called him, but I believe that he's making a mistake by not lowering interest rates," Trump said. "He will hopefully do the right thing. The right thing to do is to lower the interest rates," he added.
"He is keeping rates too high," Trump said. Read more: Trump's economic approval rating plumbs new depths: CNBC poll Market sensitivity on Fed independence Financial markets have reacted strongly to Trump’s comments about the Federal Reserve. Markets fell sharply when investors feared the President might attempt to remove Powell, raising concerns over the central bank’s independence.
However, markets later recovered after Trump clarified that he had "no intentions" of removing Powell. Political pressure on the Fed While presidents have occasionally expressed opinions on monetary policy, direct pressure on the Federal Reserve has been rare in recent decades. The last major instance occurred in the 1970s, when President Richard Nixon pushed then-Fed Chair Arthur Burns to maintain a loose monetary policy ahead of his re-election campaign, according to the Associated Press.
Although the move initially appeared beneficial, it was later linked to a period of high inflation. The focus now turns to whether Trump will follow through on his remarks and whether Powell, who is known for upholding the Fed's independence, would be open to such a discussion. Any move perceived as political interference could renew concerns in the financial markets.
Read more: Trump mulls auto tariff exemptions as industry pushes back (With agency inputs).
