US President Donald Trump renewed pressure on the Federal Reserve to cut interest rates immediately, saying at a White House meeting that the Fed should hold a “special session” to lower interest rates.
“When is a better time to cut rates than now? Even a third grader can tell you that,” Trump added, according to a video shared on X.
President Trump reiterated his call for interest rate cuts after saying on Truth Social Thursday that the Federal Reserve chairman “should lower them immediately.”
In January, the president argued that the U.S. should set interest rates “significantly lower” and the “lowest in the world,” labeling Mr. Powell “too slow” and claiming he was “hurting our country and its national security” by keeping interest rates high.
President Trump has advocated lowering interest rates to reduce the cost of servicing the US $39 trillion debt and stimulate economic growth, housing and the stock market.
Lower interest rates could also push investors toward higher-risk assets such as stocks and cryptocurrencies. Lower borrowing costs also expand market liquidity, meaning more money flows into speculative assets.
No interest rate changes likely at Wednesday’s Fed meeting
The US central bank began its two-day March meeting on Tuesday and is expected to announce its interest rate decisions on Wednesday.
However, the CME futures market paints a different picture, with there currently being a 99% chance that interest rates will remain unchanged from 3.50% to 3.75% this week.
The results for the April 29 meeting were similar, with a 97% probability of no change.
Related: March CPI increase is already “priced in” in BTC price — Analyst
This is despite expectations that President Trump’s pick to replace Kevin Warsh as Fed chairman, who will take office in mid-May when Powell’s term ends, could be more willing to lower interest rates.
The war with Iran has also caused oil prices to rise, which means higher fuel costs and is likely to push up the prices of food and other goods through higher transportation costs, leading to higher inflation and potentially prompting the Fed to raise interest rates.
Current U.S. inflation is stable at 2.4% in February, but is expected to rise in March, according to Trading Economics.
US interest rates have been unchanged since December. sauce: trade economy
The Fed will play a waiting game
“Traders are already pricing in the possibility of zero production cuts this year” due to the impact of the US-Iran conflict on rising oil prices, BTSE exchange chief operating officer Jeff May told Cointelegraph.
This should mean that “downward pressure on crypto asset prices will ease” as the impact of oil on inflation is “currently uncertain” and the Fed is likely to “continue to wait and see how things develop.”
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