Trump demanded the Fed cut its key key rate to 1% or lower
Quick Look
- US President Donald Trump has demanded the Federal Reserve cut its key rate to one percent or lower, saying the US is the best source of credit in the world.
- This comes after the Fed raised rates 25 basis points to a range of 3.75-4 percent on September 16 for the first time since July 2023.
- Fed Chairman Kevin Warsh, Trump's protege, explained the decision by high inflation.
AI-generated summary
Why It Matters
The Fed on Sept. 16 raised its key rate by 25 basis points to a range of 3.75-4 percent for the first time since July 2023, citing high and persistent inflation. Trump previously stated that no country should have a rate lower than the United States and called for ignoring the regulator’s data on inflation.
The Federal Reserve's key rate should be one percent or less. US President Donald Trump demanded that the figure be reduced; he wrote about this on his social network Truth Social.
On September 16, the Fed raised its key rate by 25 basis points, to a range of 3.75-4 percent for the first time since July 2023. Trump’s protege, the head of the regulator, Kevin Warsh, explained the decision by saying that inflation “is too high and has remained so for too long.”
“Interest rates in the US should be 1 percent or less because we are the best lender in the world by a wide margin. Our country is thriving because of new investments,” Trump said.
The head of state also recalled his threats to stop trade with countries with which the United States has a deficit: “If we stopped trade with every country with which we have a deficit, which is the majority, we would earn at least $1.5 trillion a year,” the president calculated. In his opinion, the United States is dragging down almost every country in the world, and this cannot continue.
Trump previously said that no country should have a rate lower than the United States. At the same time, he urged not to pay attention to the data of the American regulator on inflation and the state of the economy.
What to Watch
AI outlook — possibilities, not facts
The Fed will remain independent and will not cut rates to 1% in the coming months malgré pressure from Trump
Likely · Within months
Trump will continue to publicly criticize the Fed and link monetary policy to trade demands
Very likely · Within weeks
Open Questions
- Does Trump intend to officially put pressure on the Fed through legislative or administrative channels?
- How will financial markets react to possible political pressure on central bank independence?
- Which countries, according to Trump, have a trade deficit with the United States and may be threatened with a trade cutoff?
