In-Depth Analysis: Does Trump Want to Force the Federal Reserve to Cut Interest Rates? The Only 'Nuclear Button' is Here!
Brothers, recently the drama between Trump and the Federal Reserve has intensified—on one side, the White House is frantically calling for interest rate cuts, while on the other, Powell remains steadfast, relying solely on data.
Today we will dig into whether Trump has any tricks to make the Federal Reserve yield. The answer may be harsher than you think: crashing the job market and sending the unemployment rate soaring!
Current Situation: The Game Logic Behind the Interest Rate Cut Standoff
The Federal Reserve's current stance is very clear: inflation hasn't been brought down to the 2% target, and employment data is still stable, so why should they cut interest rates?
Even if Trump tweets daily bombshells or threatens to fire Powell, the Federal Reserve is protected by law and is simply not swayed by this.
Key Conflict Points:
Trump wants short-term economic data: high tariffs have led to skyrocketing corporate costs, urgently needing interest rate cuts to hedge against recession risks, while conveniently shifting the blame to the Federal Reserve.
The Federal Reserve looks at long-term inflation + employment: Powell insists on being 'data-driven', with current inflation at 2.7% (core at 2.8%) and an unemployment rate of 3.9%, there is absolutely no reason to cut rates.
What’s even more painful is that Trump's tariff policy may actually push inflation higher, making the Federal Reserve even more reluctant to adjust interest rates.
Trump's only trump card to force the Federal Reserve to cut rates is to create an unemployment crisis. But this tactic could harm himself as much as the enemy, potentially triggering an economic recession.
For us retail investors, we either anticipate potential targets for interest rate cuts in advance or buckle up and wait for the storm to pass.
Remember: in the game of macro giants, surviving is the biggest victory!