Trump Signals Fed May Soon Cut Interest Rates

During a meeting on Friday President Donald Trump indicated that the Federal Reserve might reduce interest rates after his positive encounter with Chair Jerome Powell. The statements from the president suggest possible changes in monetary policy before the upcoming Federal Reserve decision.

During his press conference Trump declared that his interest rate discussion with the Fed was “very good.” The president made these statements after visiting the Fed headquarters where he criticized the $2.5 billion renovation project of the central bank.

Trump has repeatedly urged Powell to implement easier monetary policies while he previously called Powell a “numbskull” for his refusal to make aggressive interest rate reductions. The White House and central bank tensions grew more intense when Trump visited the Fed while avoiding direct threats to fire Powell.

The upcoming Federal Reserve meeting will likely maintain current interest rates but market participants now expect a rate reduction before September. The FedWatch tool from CME indicates that rate cut probabilities exceed 60%.

The White House maintains its pressure on the Fed which creates worries about central bank independence since investors fear political interference in monetary policy during election years.