Cailian Press, July 26th (Editor: Niu Zhanlin) – On Friday local time, U.S. President Donald Trump stated that he believes the Federal Reserve will soon initiate rate cuts, a target he has been pressuring for months. The day before, Trump and Federal Reserve Chairman Jerome Powell met at the Fed headquarters.
Trump claimed that he had a pleasant meeting with Powell on Thursday, believing that the Fed is ready to provide the loose monetary policy he has been seeking for several months.
“I think we had a great meeting on interest rates. Powell was very firm in telling me, ‘The economy is running well’, which I interpreted as him beginning to suggest rate cuts.”
However, Powell and most other Fed officials have always been cautious about rate cuts, concerned about the delayed impact of Trump’s tariffs on inflation. In fact, Powell has repeatedly advocated for caution until clear data emerges, arguing that the economy is strong enough to withstand high interest rates.
Before Trump made his statement, Russell Watters, the Director of the White House Office of Management and Budget, continued to pressure the Fed, calling for a comprehensive review of the central bank’s operations and urging for a rate cut to boost the real estate market.
Watters stated, “There are a series of issues surrounding the Fed that need clarification, and we hope to get answers over time. This is not an attempt to pressure the Fed Chair but rather a concern about policy.”
The Thursday meeting was seen as a chance for both sides to ease tensions. The Fed released a statement on Friday, expressing its pleasure in receiving the president and Republican lawmakers and thanking the president for his support for the Fed’s renovation project at its headquarters.
A Fed spokesperson said, “We appreciate the president’s encouragement to complete this important project, and during our efforts to complete it, we remain committed to continuing to manage these resources prudently.”
Beyond the issue of interest rates, the White House also targeted the Fed’s balance sheet losses. Due to long-term high interest rates, the Fed’s deposit reserve interest payments to banks in 2024 exceeded their portfolio returns, resulting in a loss of nearly $80 billion for the year.
Watters claimed that the White House would continue to express concerns about the Fed’s management. “In the American political system, no one can escape scrutiny, and the Fed is no exception.”
On Thursday, Trump downplayed the threat of dismissing Powell and believed he would make the right decisions. The future of rate cuts in the next Fed meeting is currently expected to be almost impossible, with a first rate cut likely in September and another possibility by the end of the year.
