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Highlights
- The US president sent a handwritten note to the Fed Chair, calling for him to lower rates by "a lot."
- Donald Trump again stated the Fed is costing the country billions by not cutting rates.
- Trump stated that there is no inflation and so, there is no reason to keep rates at the current benchmark rate.
US President Donald Trump has continued to pressure Fed Chair Jerome Powell and the committee to lower rates from the benchmark 4.25% to 4.5%. This time around, the president has gone as far as sending a handwritten note to Powell, which contained a breakdown of how other countries have lower rates, in a bid to force the Fed to lower rates to as low as 1%.
Donald Trump Sends Handwritten Note To Powell
In an X post, the White House Rapid Response account shared an image of the handwritten note that the US president sent to Jerome Powell. The president wrote the note on a document that contained a breakdown of the World Central Bank rates of different countries.
Donald Trump highlighted Switzerland, Cambodia, Japan, Denmark, Thailand, and Seychelles, which currently have the lowest rates between 0.25% and 1.75%, stating that the US’s rates should also be in a similar range. Trump also addressed Powell, telling him that he is, as usual, “too late.”
The president further remarked that Powell has cost the USA a fortune and continues to do so by not cutting rates. He then urged the Fed Chair to cut interest rates by “a lot,” as there is no inflation. The US interest rate is currently at 4.25% to 4.5%, but Trump believes it should be way lower.
Donald Trump continues to push the Fed for an interest rate cut even after the FOMC left rates unchanged at its June meeting earlier this month. The president recently called on Powell to resign if he would not cut rates. Trump has also made it clear that he would only nominate a Fed Chair who is willing to cut rates.
Powell’s term ends in May next year, but Trump is already actively seeking a replacement and has hinted on several occasions that he could make an announcement even before the year ends. As CoinGape reported, Trump said he is already interviewing candidates and has four candidates on his shortlist.
Traders Betting On a Rate Cut In July
Although Jerome Powell has so far remained steadfast on the wait-and-see approach before cutting rates, traders are beginning to bet on the committee cutting rates as soon as July. This indicates that Donald Trump’s push for a rate cut could indeed impact the FOMC’s decision at the next meeting.
CME FedWatch data shows that the odds of a rate cut remaining unchanged at the July FOMC meeting have dropped from as high as 87.6% less than two weeks ago to 78.8%. On the other hand, there is now a 21.2% chance that the Fed could lower rates by 25 basis points (bps) at the July 30 FOMC meeting.
As CoinGape reported, Federal Reserve Governor Christopher Waller stated that an interest rate cut could come as early as next month. Although Powell looks determined to keep rates steady, other members of the committee could budge to Trump’s demand and vote in favor of a rate cut.
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