In a fiery Truth Social post, President Donald Trump once again turned his sights on the Federal Reserve, demanding an immediate interest rate cut and telling his followers that “we are close” to seeing it happen.
📌 The Backdrop
Political Pressure Mounts
Trump has kept up steady attacks on Fed Chair Jerome Powell, accusing him of dragging his feet on rate cuts and harming key sectors like housing. According to Trump, lower rates would slash federal borrowing costs and supercharge economic growth.
Markets Sniff a Cut
Recent weak jobs data and easing inflation have lifted market expectations for a September cut. Some analysts are putting the odds at 85–94% for a 0.25% reduction.
Fed Holding Its Ground
The Fed has so far kept rates between 4.25–4.50%, pointing to sticky inflation above its 2% target and uncertainty from trade policies. While two board members, Christopher Waller and Michelle Bowman, voted for a cut, Powell has struck a more cautious tone.
⚠️ Why This Matters
Independence on the Line
Critics warn that Trump’s aggressive messaging risks undermining the Fed’s independence. If political pressure drives decisions, it could make inflation harder to contain over the long run.
Will It Work Anyway?
Even if Powell & Co. do cut rates, economists caution that mortgage rates and other long-term borrowing costs may barely budge, since they’re more tied to treasury yields and investor sentiment. Europe’s recent struggles show that lower policy rates don’t always equal cheaper loans.
💡 The Bottom Line
Trump’s emphatic “WE ARE CLOSE TO RATE CUTS” post may be more rallying cry than policy signal. Still, it highlights the growing tug-of-war between politics and economic stewardship at a time when markets are already on edge.
Whether the Fed delivers a September cut—or doubles down on caution—will shape both the economy and the political battlefield in the weeks ahead.