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Highlights
- The President again criticized Fed Jerome Powell as being too late.
- He believes that the Fed should have began cutting rates a long time ago.
- Fed Governor Chris Waller has suggested that they could make multiple cuts over the next six months.
U.S. President Donald Trump is again pushing for a Fed rate cut ahead of the September FOMC meeting. With the committee likely to lower interest rates, the focus is now on the magnitude of the cut, although a 25 basis points (bps) cut is the most likely for now.
Trump Cites Prediction Of A 100 BPS Rate Cut
In a Truth Social post, the U.S. president cited Greg Faranello, who opined that the Fed needs to lower interest rates from the current benchmark. The market expert had also said that the Fed is likely to come down here by “50, 75, or maybe 100” bps.
Trump also cited Jay Hatfield’s comments on how the Federal Reserve is “broken” and that it needs to be “fixed,” and that there was a need to use modern sources of information in determining when to make Fed rate cuts. The comment also suggested that Powell had done a terrible job since he adopted a 2% inflation target, as it is too low and rigid.
Hatfield also opined that the Fed is following outdated data to determine monetary policy, which he claimed is a much bigger problem than the notion of Fed independence. Notably, Trump’s post comes ahead of the FOMC meeting next week, when the Fed is likely to make its first rate cut this year.
However, the president believes that Powell is too late and that the committee should have made several Fed rate cuts before now. Powell had signaled at Jackson Hole that they might have to lower interest rates due to the downside risk in the labor market, which looks to be rising.
As CoinGape reported, the August U.S. jobs data came in way below expectations as the U.S. economy added only 22,000 jobs last month, as against projections of 75,000. Meanwhile, the unemployment rate came in at 4.3%, nearing a 4-year high.
Market Still Expecting A 25 Bps Cut For Now
CME FedWatch data shows that the market is still pricing in a 25 bps Fed rate cut at the upcoming FOMC meeting. There is currently a 91% chance that the Fed will lower rates by 25 bps.
Meanwhile, the odds of a 50 bps rate cut are currently at 9%. The odds had climbed to as high as 11% over the weekend. Now, traders await the PPI and CPI inflation data, which could also influence whether the Fed makes a higher cut or sticks to a 25 bps cut.
Fed Governor has already urged his colleagues to make a 25 bps Fed rate cut and suggested that they should make multiple cuts between the next three to six months. He remarked that he wasn’t worried about inflation, as he expects it to remain steady despite the Trump tariffs.
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