Clash Between US President and Fed: Trump Slams Federal Reserve Over Interest Rates
Fed Defies Trump's Pressure, Keeps Interest Rate at Current Level - Heading Toward a Potential Clash with Trump: The Federal Reserve Refrains from Adjusting Interest Rates
Get ready for another showdown between the US President and the Federal Reserve! The American central bank has kept its key interest rate steady at a high level, setting up another confrontation with Donald Trump. The central bank's rate remains in the range of 4.25 to 4.5 percent, as stated by the Fed in Washington.
Trump, who has been urging the Fed to lower interest rates in recent weeks, is reportedly none too pleased with this decision. The central bank cited the increased risk of higher inflation as one reason for its decision, a move that some might interpret as a nod towards Trump's aggressive trade policies.
Trump took to twitter to comment on the Fed's move, saying, "I understand more about interest rates than that man Jerome Powell." It's no secret that Trump has repeatedly criticized the Fed Chairman in the past. While the Fed operates independently of the US government, it's clear that the two sides are now on a collision course.
Recent economic data suggests that inflation in the US has eased significantly, with consumer prices rising by only 2.4 percent year-on-year in March, down from 2.8 percent in February. However, this trend remains to be seen, especially since March was the month before Trump's comprehensive tariff package with blanket tariffs on goods from around the world.
The Fed's main job is to keep inflation in check, and high interest rates are one way they do that. By making loans expensive, they can dampen demand and ideally discourage companies from raising their prices. However, this can also slow down the economy.
The Fed initiated a rate hike in September 2022, increasing the key interest rate by 0.5 percentage points. However, since then, they have not touched the key interest rate despite persistent inflation. The Fed expects the key interest rate to be 3.9 percent on average in 2025, suggesting two small rate hikes this year.
Trump, on the other hand, wants to see a significant cut in interest rates to boost economic growth. The Republican believes that lower interest rates will support stock markets, make government financing cheaper through debt, and stimulate the economy. However, some experts worry that Trump's trade policies will have a negative impact on the economy and drive up prices. Despite these concerns, Trump has dismissed them.
It's clear that we are heading for a showdown between Trump and the Fed, with differing views on how best to manage the economy amidst rising inflation concerns and potential downturns. It remains to be seen who will emerge victorious in this battle.
Sources1. MarketWatch2. The Hill3. CNBC
- Jerome Powell, the President of the United States' criticism target, is in a collision course with Trump as the latter expresses his desire for lower interest rates.
- The average key interest rate is expected to be 3.9% according to the Federal Reserve for the year 2025, hinting at two small rate hikes this year.
- The collision between Trump and the Federal Reserve is also a collision between politics and finance, with Trump wanting lower rates for economic growth, while the Fed aims to keep inflation in check.
- If Trump's policies impact the economy negatively and drive up prices, it could create challenges for the Federal Reserve's mission to manage inflation.
- Business and general-news have been buzzing with discussions about the clash between Trump and the Federal Reserve, especially regarding interest rates and the central bank's role in economic recovery.
