President Trump once again urged for lower interest rates following the positive employment data from the U.S. Some analysts hope that new interest rate cuts will create positive momentum for Bitcoin.
However, there are no signs that Powell will change his mind. If anything, that likelihood is even lower. Tariffs could cause unprecedented chaos, and the economy currently does not need interest rate cuts to survive.
Can Trump Force Interest Rate Cuts in the U.S.?
Today, the U.S. Bureau of Labor Statistics released the latest employment report, which appears quite optimistic amid concerns of economic recession. The total number of non-farm jobs increased by 177,000, far exceeding expectations, while the unemployment rate remained stable and wages increased.
This has led President Trump once again to call for interest rate cuts:
President Trump has repeatedly urged Federal Reserve Chairman Jerome Powell to cut interest rates. The cryptocurrency industry has also strongly supported this move, which would encourage investment in risky assets. However, both Powell and other senior Fed officials have made it very clear that tariffs are too unpredictable to continue cutting interest rates.
Powell's stance is very consistent. Tariffs could severely damage the economy, and the Federal Reserve needs to maintain a reserve of funds to prevent a future collapse. If they cut interest rates after positive news, the Fed will have less potential tools in case of a real crisis.
Trump even threatened to fire Powell over the interest rate cuts issue, but backed down after the market panicked. He cannot legally fire Powell; removing such a prominent regulator would certainly cause chaos.
After the employment report was released, the market predicted fewer interest rate cuts, and CME reported that a adjustment in May is virtually impossible.
To put it bluntly, the likelihood that Trump will soon achieve the desired interest rate cuts is very low. Justin Wolfers, an economist at the University of Michigan, explained why the optimistic report actually makes interest rate cuts less likely:
"I am almost certain that the Fed will maintain its stance at the next meeting. The real economy (so far) is strong enough not to need interest rate cuts. And the big questions are just over the horizon. Powell has made it clear: He does not want to guess what is over that horizon; he wants to wait and see. The report is completely legitimate. The White House's interpretations are another matter," he said.
President Trump wants this interest rate cut, but he cannot force it without causing bigger problems. Because tariffs are very chaotic and unpredictable, false rumors have shaken the cryptocurrency market on several recent occasions. Traders should be cautious of speculation that seems too good to be true.