Trump Calls for Jerome Powell to Cut Interest Rates After Visiting Fed Headquarters

During a high-profile visit to the Federal Reserve Building, the President of the United States reignited the debate over monetary policy by requesting Fed Chair Jerome Powell to cut interest rates. The visit, which included Senator Tim Scott, took place during the renovation of the famous building that Trump once said "would be better if it had never been started," referring to the enormous cost overruns. Trump Criticizes Renovation Costs, Suggests Better Financial Management Trump said this when he reflected on the costs of renovating the Fed. However, he continued to state that this really needs to be done but the project has been mismanaged and costs keep rising. He pointed out that despite the excessive spending, the U.S. economy is still performing well enough to "pay for almost everything - even the costs for this building." True to his working style, he compared this renovation to his own real estate transactions: "I renovated the Old Post Office on Pennsylvania Avenue and it was a roaring success.... The cost was only a small fraction of the Federal Reserve's budget and the building is also smaller." "Lower Interest Rates" — Trump's Direct Message to Powell Aside from complaints about infrastructure, Trump seized this moment to endorse his often-seen loose monetary policy. His message was nothing short of straightforward. "Get this done and, more importantly, CUT INTEREST RATES!" His call was another public effort to push Jerome Powell to cut rates, aligning with his long-standing criticisms of the Fed's cautious monetary policy. Although Trump stated that there are currently no plans to fire Powell - a move he acknowledged would endanger the independence of the Federal Reserve - he believes that the Fed Chairman has been "too late" in cutting interest rates. Trump added that "everyone knows what is right," implying that the interest rate cuts are even approved by those who previously supported tighter policies. Analysts also noted that Trump's continuous push for Jerome Powell to cut interest rates could influence the political landscape heading into 2025. In private discussions, his advisors are said to have expressed similar views, repeatedly pointing out the need for Jerome Powell to cut interest rates as a tool to stimulate the economy ahead of the next election cycle. Even conservative economists who once supported tighter monetary policy are now agreeing that it is time for Jerome Powell to cut interest rates to maintain the growth momentum of the United States.

The Independence of the Fed Remains Intact — But Pressure is Increasing Despite billions of eloquent words on this issue, Trump insists that he has not violated the independence of the Fed. His confidence that Powell will "do the right thing" further reinforces that there is pressure rather than coercion. However, many in the financial industry believe that Trump's continuous statements urging Jerome Powell to cut interest rates are beginning to affect investor sentiment and the Fed's media strategy. Trump's comments came after Federal Reserve Chair Mary Daly noted that the tariffs he imposed had less impact on inflation than expected. Ms. Daly also implied that two interest rate cuts this year could be the right decision, aligning with Trump's calls. If the market continues to loosen policy, the possibility of Jerome Powell cutting interest rates could be even stronger as we move into the fourth quarter of 2025. No Immediate Rate Cuts - But the Market Is Looking Towards September With the upcoming July meeting of the Federal Open Market Committee (FOMC), the Federal Reserve (Fed) will certainly keep interest rates unchanged. CME's FedWatch tool predicts that the likelihood of interest rates staying at 4.25%-4.5% throughout this month is 97.4%.

On the other hand, the market is pricing in the possibility of cutting down the whales in the second half of 2025, as inflation eases and economic signals head towards Trump's optimistic target.