Trump calls for interest rate cuts again, attributing the unexpectedly high CPI in January to "Biden inflation," but the market is no longer buying it

On Wednesday morning Eastern Time, U.S. President Donald Trump posted a comment on the social platform Truth Social, stating:

Interest rates should be lowered, which will complement the upcoming tariff policy!!! Let's rock, America!!!

The post did not specify whether he was referring to the Federal Reserve's short-term benchmark interest rate, the 10-year U.S. Treasury yield, mortgage rates, auto loan rates, or all of the above.

A few days earlier, U.S. Treasury Secretary Basant stated in a media interview that the Trump administration was more focused on the 10-year Treasury yield for lowering borrowing costs rather than the Federal Reserve's short-term benchmark interest rate. When asked if Trump wanted to lower interest rates, Basant said, "President Trump and I are both focused on the 10-year Treasury; he is not pressuring the Federal Reserve to lower rates."

Shortly after Trump's comment, the U.S. released the January CPI data, which showed inflation figures exceeding expectations across the board. The year-on-year CPI growth rate for January rose to 3%; month-on-month growth was 0.5%, the largest increase since August 2023, marking the seventh consecutive month of acceleration; core CPI accelerated to 0.4%.

In response to the latest CPI data, Trump posted again, mentioning "BIDEN INFLATION UP," criticizing the higher-than-expected inflation report as "Biden inflation."

Trump's two comments on interest rates and inflation were made about an hour apart. Analysts suggest that Trump's actions aim to avoid potential political dangers at the beginning of his second term. The January CPI data includes 12 days during Trump's presidency.

Kevin Hassett, Director of the White House National Economic Council, stated that regardless of the Federal Reserve's involvement, we will address inflation in the U.S.

White House Press Secretary Karoline Leavitt told reporters in Washington later on Wednesday, "I think the situation is much worse than anyone anticipated because, unfortunately, the previous administration did not disclose the true state of the economy."

During last year's U.S. presidential campaign, Trump frequently highlighted inflation and cost-of-living issues during Biden's administration, while also focusing on immigration issues, which reflect the public's negative views on Biden's handling of economic matters.

Prominent Democratic Senator Elizabeth Warren stated in a statement, "President Trump promised to lower costs for working families during his campaign, but today's inflation data highlights his failure to deliver on that promise."

In response to Trump's latest post, well-known financial journalist Nick Timiraos, known as the "New Federal Reserve Correspondent," stated:

Some of Trump's economic advisors have recently expressed differing views, arguing that the Federal Reserve needs to fully control inflation before lowering interest rates.

The U.S. Treasury stated last week, "Inflation needs to further moderate to align with the Federal Reserve's targets."

Federal Reserve Chairman Jerome Powell attended a U.S. Congressional hearing this week. On Tuesday, he stated that given the resilience of the economy, the Federal Reserve does not need to rush to lower interest rates. Regarding the CPI data released on Wednesday, he mentioned that the long-term inflation target of 2% is close but not yet achieved. He also noted that the Federal Reserve may adjust rates due to tariffsThe market does not buy into Trump's latest call for interest rate cuts. After the CPI data was released, traders adjusted the timing of the next Federal Reserve rate cut from September this year to December. In comparison, before the CPI report was published, traders were inclined to expect two rate cuts this year