President Donald Trump is turning up the volume on Fed Chair Powell, demanding that the Federal Reserve slash interest rates right now. Speaking at a White House gathering, Trump insisted the Fed should call a “special meeting” to drop rates without delay.
“What’s a better time to cut interest rates than now? A third-grade student would know that,” he asked, as clips spread quickly across X.
This isn’t new territory for Fed Chair Powell
Trump doubled down on his stance after blasting on Truth Social just days earlier that the central bank leader “should be dropping interest rates IMMEDIATELY.”
Back in January, Trump argued the U.S. deserves “substantially lower” rates, the lowest globally, while slamming Fed Chair Powell as “too late” and even claiming his high-rate stance is damaging the country and national security.
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Trump’s push for lower rates from Fed Chair Powell centers on easing the burden of servicing America’s massive $39 trillion national debt. Cheaper borrowing would spark growth in housing, stocks, and the broader economy. It could also nudge investors toward riskier plays, like stocks and crypto, while flooding markets with more liquidity as borrowing gets easier.
No Relief in Sight at This Week’s Fed Meeting
The Federal Reserve’s two-day March policy session starts Tuesday, with the big announcement coming Wednesday. But don’t expect fireworks; CME futures are pricing in a near-certain 99% chance that rates stay locked in the 3.50% to 3.75% range. The April 29 meeting looks almost identical, with a 97% probability of no change.
Kevin Warsh gears up to step in as the new Fed chair in mid-May when Fed Chair Powell’s term comes to an end, but markets aren’t betting on quick shifts.
The ongoing U.S.-Iran conflict has sent oil prices soaring, jacking up fuel costs and likely feeding into higher prices for food and goods through pricier transport. That spells more inflation pressure, which could force the Fed to hold firm or worse. February’s inflation held at 2.4%, but March figures are already looking hotter, per Trading Economics. Rates haven’t budged since December.
Fed Chair Powell Likely to Keep Playing the Waiting Game
With oil volatility from the Iran situation already baked into trader thinking, many expect zero cuts this year. “Traders have priced in the likelihood of zero cuts this year,” Jeff Mei, COO at BTSE exchange, said.
The unclear path for inflation from oil means the Fed, under Fed Chair Powell, will probably sit tight and watch how things unfold rather than rush into easing.
Trump’s ongoing pressure on Fed Chair Powell shows the tension between political demands for stimulus and the central bank’s focus on taming inflation in uncertain times.
