Trump exerts pressure again! Calls for the Federal Reserve to lower interest rates

According to the Zhitong Finance APP, U.S. President Donald Trump has once again pressured the Federal Reserve, calling for lower interest rates to align with his economic policies promoted during his second term, including increased tariffs and expanded tax cuts.

On Wednesday, Trump posted on social media, stating, "Interest rates should be lowered, which complements the upcoming tariff measures." His remarks come as Federal Reserve Chairman Jerome Powell is set to testify before the House Financial Services Committee.

Just a day before Trump's comments, Powell stated during his testimony in the Senate that there is currently no need to rush to adjust interest rates, further indicating that the Federal Reserve will remain patient in the near future and will not immediately lower borrowing costs. In fact, the Federal Reserve has already cut rates in the last three meetings of 2024, but decided to pause further adjustments to the benchmark interest rate during the January meeting.

Powell has repeatedly declined to comment on how the Federal Reserve will respond to Trump's policy changes, emphasizing that the Fed's decisions will depend on the specific policies implemented and their overall impact on the economy.

Trump's latest remarks differ from his statements earlier this month when he said that the Federal Reserve's decision to keep interest rates unchanged was "the right decision." However, Trump has always shown a keen interest in the Federal Reserve's monetary policy, having publicly criticized Powell multiple times during his first term and calling for rate cuts.

While past presidents typically avoid commenting on the Federal Reserve's policy decisions, Trump frequently intervenes in central bank affairs, even stating during a virtual speech at the Davos Forum last month that if elected president, he would immediately demand significant rate cuts. He also told Bloomberg during his campaign that he should have the right to advise Powell on interest rate issues, claiming that as a businessman, he has a deep understanding of the matter.

Trump's economic policy proposals during the campaign include imposing higher tariffs on Chinese imports as well as steel and aluminum products, while delaying tariffs on Canada and Mexico, and promising to implement "reciprocal tariffs" on multiple countries within the week. These policy measures have heightened market uncertainty and could have far-reaching effects on the U.S. economic outlook.

Many mainstream economists warn that Trump's tariff policies could drive up inflation, which has been a focal point of concern for U.S. voters. Inflation is also a significant factor influencing the election in 2024 and may help Trump return to the White House to some extent.

Data released on Wednesday showed that U.S. inflation in January was slightly higher than expected, leading to a rebound in U.S. Treasury yields and the dollar. The year-on-year CPI accelerated to 3%, above the market consensus of 2.9%, while the core CPI year-on-year rate was 3.3%, higher than December's 3.2% and the market expectation of 3.1%. Following this data, the 10-year Treasury yield was 4.634%, the 2-year Treasury yield was 4.380%, and the dollar index rose by 0.5%, with all indicators increasing after the CPI report was released