:max_bytes(150000):strip_icc()/GettyImages-2217179973-f1c40843bcfd4a0baec63324a0e5c799.jpg?w=1920&resize=1920,1267&ssl=1 "Trump Wants the Fed to Cut Interest Rates by a Full Point. That Normally Takes a Recession")
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key takeaways
- President Donald Trump demanded the Federal Reserve to reduce his benchmark interest rate from a full percentage point.
- Fed, which operates independently of the White House control, has opposed Trump’s call for low interest rates.
- Low rates can lead to the economy promoted but there is a risk of igniting inflation.
- The Fed typically adjusts its interest rate a quarter points at a time: last time it was cut a full point, in March 2020 when the epidemic was hit.
President Donald Trump on Friday renewed his call on the Federal Reserve to reduce his benchmark interest rate, and this time, he had to ask a specific (and giant).
In a series of social media posts on Friday morning, Trump pointed to the recent track records of the economy’s solid job development and cooling inflation, and fed the federal reserve president Jerome Powell to not soon reduce. Trump said that the central bank should reduce its impressive Fed fund rate from “a full point”, saying that it would be an economic “rocket fuel”!
The Fed adjusts its Fed Fund rate, which affects the cost of borrowing on all types of loans to keep inflation low and keep employment high.
Fed officials have so far kept their rate higher than normal this year, which is trying to push inflation down to its target of 2% annual rate. Officials said they are waiting to see what happens in the economy because they are worried that Trump’s tariffs can increase prices and set a new round of inflation.
The vigilant approach of the Fed has angered Trump, who wants to cut the rate and can promote economic growth. A full percentage point will be a major step by the cut fed and the Fed Fund rate will bring the rate of 3.25% to 3.5%, which is the lowest since September 2022.
The fed usually transferred a quarter-point at a time. The last percentage points in the fed rate rates were March 2020, when it was clear that the Kovid -19 epidemic will thrash the economy. Earlier, Fed cut a full point in December 2008 during the Great Recession.
Why does Trump say that Powell ‘is too late’
Posts were the latest steps in Trump’s pressure campaign to influence Fed’s decision on monetary policy. The central bank is designed to be untouched by politics, and Powell has stated that Fed’s decisions will be based only on economic views.
Trump has repeatedly criticized Powell for not reducing the interest rates, unlike the European counterpart of the Fed. European Central Bank has cut rates eight times since last June. Fed cut rates three times during the period of that time, including the jumbo half-point cut in September, but has kept the rates flat.
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