Trump Demands Rate Cuts as Fed Meets, Markets Bet on Hold
President Trump posted on Truth Social demanding Federal Reserve chair Jerome Powell drop interest rates immediately. CME futures markets show a 99% probability the Fed will hold rates steady at Wednesday's announcement.
Key Takeaway
Markets have priced in zero rate cuts this year despite Trump's pressure campaign.
President Trump posted on Truth Social that Federal Reserve chair Jerome Powell should be dropping interest rates immediately, arguing the ₱2.33 quadrillion ($39 trillion) national debt makes lower rates necessary.
The Fed kicks off a two-day meeting Tuesday with CME futures markets showing a 99% probability rates stay unchanged in the current 3.50% to 3.75% range. The April 29 meeting has a 97% probability of no change, according to CME data.
Trump argued what's a better time to cut interest rates than now and claimed a third-grade student would know that. He called for a special White House meeting to reduce rates, saying lower borrowing costs would stimulate economic growth, housing, and the stock market. Lower rates typically push investors toward higher-risk assets like stocks and crypto.
BTSE Exchange Chief Operations Officer Jeff Mei said traders have already priced in the likelihood of zero cuts this year. The Fed will continue to wait out the situation, Mei said, particularly after the US-Iran conflict caused oil prices to surge and raise fuel costs.
Inflation remained at 2.4% in February, but a higher March print is already baked in according to market expectations. The last time US interest rates changed was in December 2024, when they remained unchanged after previous cuts.
Trump's pick Kevin Warsh takes helm as Fed chair in mid-May when Powell's term ends.
This article was written based on reporting from Cointelegraph.
