Trump Urges Powell for Interest Rate Cut; Unlikely Soon

President Trump Urges Fed to Lower Interest Rates

President Trump recently met with Federal Reserve Chair Jerome Powell, emphasizing his request for lower interest rates. However, experts predict a 96% chance that the Fed will maintain its current rates when announcing its decision on Wednesday. The Fed has kept rates between 4.25% and 4.5% since December 2024 to manage inflation concerns.

Despite Trump's criticism of Powell's cautious approach, Powell stands firm on not cutting rates immediately, citing a strong economy. Powell, nominated by Trump in 2017, aims to keep rates unchanged to address potential inflation from new tariffs.

Trump argues for rate cuts, citing actions by the European Central Bank and the Bank of England. However, June's Consumer Price Index showed a 2.7% annual increase, surpassing the Fed's 2% target due to tariff impacts.

The Federal Reserve's 12-person committee, not Powell alone, decides on rate adjustments. While some members advocate for rate cuts, economists estimate a low 4% chance of a cut this week. The Fed is expected to hold off on cuts to monitor economic conditions.

The Fed's decision will be announced on Wednesday, followed by a press conference with Powell. Powell is likely to face questions about political pressure from Trump and potential replacements. The Fed may consider a rate cut in September, with economists predicting a 0.25 percentage point reduction.