Trump Continues to Push for Rate Cuts
While inspecting a renovation project at the Federal Reserve, Trump publicly expressed his desire for Chair Powell and the Federal Open Market Committee (FOMC) to move quickly in cutting rates. He pointed out that the European Union has already made several rate cuts, whereas the Fed has yet to take any similar action this year — a sharp contrast to the three rapid cuts made last year.
Trump argued that the United States should have the lowest interest rate in the world, citing Switzerland’s negative interest rate of -0.50% as an example. He asserted that U.S. rates should also be lowered to similar levels and reiterated his call for a 300-basis-point cut. According to Trump, the American economy is booming, inflation is cooling, and the labor market remains strong — ideal conditions, in his view, for a rate cut that would act as “rocket fuel” for further growth.
Mounting Tensions Between Trump and Powell
Trump’s visit comes at a time when Fed Chair Powell is under intense scrutiny over the renovation project’s budget. Representative Anna Paulina Luna recently referred Powell to the Department of Justice for alleged perjury regarding renovation costs, sparking speculation that Powell could be forced to resign — or that Trump might fire him on the grounds of fraud.
However, President Trump dismissed the rumors of Powell’s dismissal, stating that he currently has “no plans” to remove the Fed Chair. Still, he criticized Powell for being “too slow” to act, and acknowledged that replacing him would be a “big move” that could jeopardize the central bank’s independence.
Trump said he had a private conversation with Powell and expressed confidence that Powell would “do the right thing.” The president added that there is no pressure being placed on Powell, but that “everyone knows what the right move is.” Even those who previously supported higher rates, Trump claimed, are now shifting toward favoring rate cuts.
Fed Maintains a Cautious Stance
It’s worth noting that San Francisco Fed President Mary Daly recently admitted that the Trump-era tariffs have not exerted as much inflationary pressure as initially feared. She agreed that two rate cuts this year would be a “reasonable” forecast.
Still, the Fed is widely expected to keep interest rates unchanged at the upcoming July FOMC meeting. According to CME FedWatch data, there is a 97.4% probability that the benchmark rate will remain between 4.25% and 4.5%.
