Posted on 01/23/2025 9:24:22 AM PST by Miami Rebel
President Donald Trump said Thursday he would apply pressure for interest rates to fall, paving the way for a possible confrontation with the Federal Reserve as its first rate decision of the year approaches.
Speaking at the World Economic Forum in Davos, Trump told an assembly of global leaders that interest rates both in the US and internationally were too high and that he would call for an instant move toward lower rates.
“I’ll demand that interest rates drop immediately,” he said. “And likewise, they should be dropping all over the world. Interest rates should follow us all over.”
Trump said during last year’s presidential campaign that he believed he should get a say in interest rate decisions as president and said the Fed’s chair Jerome Powell has “gotten it wrong a lot” on rate calls.
The Fed is due to announce its first decision on interest rates of the year next week (January 28-29), with market expectations for multiple rate cuts in 2025 scaled back to just one – and Fed governor Michelle Bowman said its December rate drop marked the “last step” in its “policy recalibration,” suggesting the central bank could be about to hit pause.
Trump, who appointed Powell, has clashed with the Fed chair and compared him to a “golfer who couldn’t putt.” Powell, for his part, quashed speculation in November that he would be fired and said the president removing the Fed chair was “not permitted under the law” and that he wouldn’t leave of his own accord.
End the Fed!
Trump sounds just like any other real estate state agent or investor or builder or buyer. Always pimping for lower rates. Jawboning won’t do it.
The Fed can exercise some control over short term rates but little over long term rates. The exception being the fed can induce a recession and some times cause rates to drop but as Jimmuh found out high rates, no growth and inflation can all exist at the same time.
Want low rates? Quit the fed from borrowing so much, lower spending. The US is on the verge of becoming a default risk. Once that party starts Trump will see Jimmuh rates.
Since Trump seems to have no desire to lower spending we are headed for an interest rate train wreck.
To be sure, the loud noise coming from Washington is all tax cuts, not spending cuts.
Trump is right. Rates are too high. Neutral is about 150BP lower.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.