Trump Hints at Clash with Federal Reserve Over Interest Rates
At the World Economic Forum, President Trump expressed his dissatisfaction with current interest rates, demanding lower rates from the Federal Reserve. He stated that interest rates should align with the direction he desires for US monetary policy.
This demand signifies a potential conflict between Trump and Fed Chair Jerome Powell, who has indicated that rates may remain unchanged for some time. Investors anticipate no rate adjustments at next week's meeting.
Despite Trump's recent comments advocating for Fed independence, his allies have previously considered measures that could undermine it. However, Trump has attempted to alleviate concerns, claiming he only wants public input.
Although Trump has previously criticized Powell, the Fed Chair has maintained his position that he cannot be removed before the end of his term in 2026.
Business leaders, including Bank of America CEO Brian Moynihan, support Fed independence. Conversely, Trump's critics, like Treasury Secretary nominee Scott Bessent, have suggested appointing a "shadow chair" to influence Powell.
Bessent has since withdrawn the shadow chair idea, emphasizing his desire for a positive relationship with Powell. However, he acknowledges that Trump will express his economic views as president.