Trump: 'I'll demand that interest rates drop immediately'

Is the president on a collision course with the Fed?

Trump: 'I'll demand that interest rates drop immediately'

Image from Gage Skidmore from Peoria, AZ, United States of America, CC BY-SA 2.0, via Wikimedia Commons

President Donald Trump said Thursday he would apply pressure for interest rates to fall, paving the way for a possible confrontation with the Federal Reserve as its first rate decision of the year approaches.

Speaking at the World Economic Forum in Davos, Trump told an assembly of global leaders that interest rates both in the US and internationally were too high and that he would call for an instant move toward lower rates.

“I’ll demand that interest rates drop immediately,” he said. “And likewise, they should be dropping all over the world. Interest rates should follow us all over.”

Trump said during last year’s presidential campaign that he believed he should get a say in interest rate decisions as president and said the Fed’s chair Jerome Powell has “gotten it wrong a lot” on rate calls.

The Fed is due to announce its first decision on interest rates of the year next week (January 28-29), with market expectations for multiple rate cuts in 2025 scaled back to just one – and Fed governor Michelle Bowman said its December rate drop marked the “last step” in its “policy recalibration,” suggesting the central bank could be about to hit pause.

Trump, who appointed Powell, has clashed with the Fed chair and compared him to a “golfer who couldn’t putt.” Powell, for his part, quashed speculation in November that he would be fired and said the president removing the Fed chair was “not permitted under the law” and that he wouldn’t leave of his own accord.

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