The tension between US President Donald Trump and Federal Reserve Chairman Jerome Powell is reaching unprecedented heights. At the heart of this conflict: monetary policy and interest rates. Donald Trump has repeatedly urged Powell to lower rates, arguing that current economic conditions fully justify it.
Donald Trump's arguments
Donald Trump believes that several economic indicators argue in favour of a reduction in interest rates. Among these indicators, he cites:
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Create account Try a demo Download mobile app Download mobile app- The price of oil: The cost of oil has fallen significantly, which could reduce production and transport costs and, as a result, stimulate the economy.
- US interest rates: These have fallen sharply in recent days as the market fears a sharp recession in the US due to the introduction of tariffs.
- Food prices: Lower food prices could also contribute to a reduction in inflation, thus providing leeway for lower rates.
For Trump, these combined factors justify a reduction in interest rates, which could stimulate economic growth and support the financial markets.
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Jerome Powell's position
However, Jerome Powell remains firm in his position. He believes that the tariffs imposed by the Trump administration on imports from China and other countries could increase inflation. Several economists estimate that this increase could be as high as 1.5%. This rise in inflation is preventing the Fed from lowering its key rates, as such a reduction could stimulate the economy and increase inflation even further.
In addition, Powell emphasises that the unemployment rate in the United States is at a historic low, which indicates a healthy economy. A rate cut in this context could overheat the economy and lead to imbalances.
A Conflict with Potential Consequences
This tug-of-war between Trump and Powell is not without consequences. The markets already took a dive on Friday following the Fed Chairman's comments and continue to fall today, with few being able to say where the US economy is headed in the coming months.
Source: Truth Social
