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The Political Conflict in the U.S. Escalates Again❗️❗️❗️
Trump threatens to fire Federal Reserve Chair Powell; why is Trump so anxious for a quick rate cut?
Since the tariff policy was announced on April 2, Trump has already shouldered the blame for causing an economic recession, but he didn't expect that Powell would still remain unyielding. Powell's stance remains: fearing an economic recession, the Federal Reserve may need to mitigate the impact of the trade war, so he doesn't want to take preemptive action, worrying about further worsening inflation.
Currently, the Federal Reserve doesn’t even want to talk, and there are no positive expectations being communicated. From his perspective, it can also be understood because, unless absolutely necessary, the Federal Reserve will not easily expand its balance sheet or cut interest rates. Arbitrarily expanding the balance sheet would lead to a severe inflation threat to the dollar's hegemony and manufacturing, so caution is necessary. Moreover, given the current economic conditions, expanding the balance sheet and cutting rates would only be a temporary fix, so currently, Trump and Bessent might seek other ways to sell U.S. bonds, possibly trying to avoid over-reliance on the Federal Reserve.
Before this; Trump may continue to pressure capital to buy U.S. stocks through stock market declines or force other countries to buy U.S. bonds through war. Additionally, continue to sanction through tariffs to purchase U.S. bonds.
If these methods ultimately fail and there are no solutions to save the U.S. bonds, he may once again seek rate cuts from the Federal Reserve; here the term is 'seek.'
Because in June, $6.5 trillion in U.S. bonds will mature, if the Federal Reserve does not continue to cut rates and other buyers do not continue to purchase U.S. bonds in large quantities, the situation will be very dangerous.
Why is Trump so concerned about rate cuts? Interest is the marginal cost of U.S. Treasury bonds; as long as interest can be paid normally, there will still be people willing to buy U.S. bonds in large quantities, which can continue to sustain this Ponzi scheme.
Ultimately, the Federal Reserve's rate cut may be realized in June, which means that April and May will be two months of policy volatility.
The Political Conflict in the U.S. Escalates Again❗️❗️❗️
Trump threatens to fire Federal Reserve Chair Powell; why is Trump so anxious for a quick rate cut?
Since the tariff policy was announced on April 2, Trump has already shouldered the blame for causing an economic recession, but he didn't expect that Powell would still remain unyielding. Powell's stance remains: fearing an economic recession, the Federal Reserve may need to mitigate the impact of the trade war, so he doesn't want to take preemptive action, worrying about further worsening inflation.
Currently, the Federal Reserve doesn’t even want to talk, and there are no positive expectations being communicated. From his perspective, it can also be understood because, unless absolutely necessary, the Federal Reserve will not easily expand its balance sheet or cut interest rates. Arbitrarily expanding the balance sheet would lead to a severe inflation threat to the dollar's hegemony and manufacturing, so caution is necessary. Moreover, given the current economic conditions, expanding the balance sheet and cutting rates would only be a temporary fix, so currently, Trump and Bessent might seek other ways to sell U.S. bonds, possibly trying to avoid over-reliance on the Federal Reserve.
Before this; Trump may continue to pressure capital to buy U.S. stocks through stock market declines or force other countries to buy U.S. bonds through war. Additionally, continue to sanction through tariffs to purchase U.S. bonds.
If these methods ultimately fail and there are no solutions to save the U.S. bonds, he may once again seek rate cuts from the Federal Reserve; here the term is 'seek.'
Because in June, $6.5 trillion in U.S. bonds will mature, if the Federal Reserve does not continue to cut rates and other buyers do not continue to purchase U.S. bonds in large quantities, the situation will be very dangerous.
Why is Trump so concerned about rate cuts? Interest is the marginal cost of U.S. Treasury bonds; as long as interest can be paid normally, there will still be people willing to buy U.S. bonds in large quantities, which can continue to sustain this Ponzi scheme.
Ultimately, the Federal Reserve's rate cut may be realized in June, which means that April and May will be two months of policy volatility.
Disclaimer: Includes third-party opinions. No financial advice. May include sponsored content. See T&Cs.
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