Speaking before the World Economic Forum in Davos, Switzerland, Trump said that he will call interest rates lower than current levels. A possible sign, it sets up a possible battle with the federal reserve.
The federal reserve should announce its next interest rate decision on Wednesday, which could arouse a reaction from the president Donald Trumpwhich recently called on the Fed to reduce interest rates.
The members of the Federal Open Market Committee (FOMC) should leave the objective of the rate of federal reference funds unchanged to a range of 4.25% to 4.5% – which would be the first break from the central bank in this cycle rate reduction after three consecutive consequences of discounts which brought in rates from 5.25% to 5.5%.
Inflation has persisted in the economy despite the fact that the annual inflation of 9.1% recorded in 40 years is considerably recorded. . Largely largely to obstinate inflation, the probability of the Fed break at the January meeting was 99.5%, according to the CME Fedwatch tool.
The Fed’s planned break could encourage Trump to renew his criticisms of the central bank and President of the Fed Jerome PowellFollowing the president’s call to reduce interest rates last week.
Trump says he won’t pull the Jerome Powell fed chair
President Donald Trump appointed the president of the Fed, Jerome Powell, for the role in 2017, but criticized the Central Bank policies under his direction. (Saul Loeb / AFP via Getty Images / Getty Images)
In a speech at World Economic Forum Last week, President Trump said that he planned to reduce the price of oil and, in turn, energy prices to combat inflation – which, according to him, should serve as a momentum Fed to reduce interest rates.
“With the drop in oil prices, I will ask that interest rates drop immediately. And, likewise, they should drop around the world. Interest rates should follow us,” said Trump.
Trump, who named Powell to his role as Fed chair In 2017, the president criticized several times over the years. During his first mandate in the White House, Trump threatened to dismiss Powell and described him as “bohet”.
While Trump campaigned to return to the White House last year, he criticized the Fed interest rate reductions as “politics” – although he declared in June that he would not try Locked Powell and reiterated this month.
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The meeting of the January federal reserve has been the first since the start of President Donald Trump’s second term. (Shawn Thew / Pool via Reuters / Reuters Photos)
The potential impact of Trump’s economic policies, including his fabric tax and expenditure reductions as well as prices on imports, will probably appear in good place when Powell will be expressed on Wednesday after the announcement of the decision of Fed.
America Bank Global Research wrote in a note to investors previewing the Fed meeting that they expect to expect a post-reunion press conference will include intense accent on Fed’s next decision As well as the way the central bank plans to weigh Trump’s policies because they provide for cuts for future rate or other breaks.
“Powell will probably be asked about the Fed’s response to the Trump policy program. We think he will stick to his position that there is a lot of uncertainty about the policies that will be implemented, and the Fed should not pre-start or pre-empt them, “wrote economists from the American bank. “But he will also probably note that some FOMC members (for example Waller and Williams) have already integrated politics from their perspectives.”
The president of the federal reserve, Jerome Powell, said that the Central Bank will base its decisions on the latest trends in economic data. (Photo of Liu Jie / Xinhua via Getty Images / Getty Images)
Earlier this month, the FOMC published the minutes of its December meeting during which political decision-makers cited a high degree of uncertainty about the economic impact of potential changes in trade and immigration policy.
This uncertainty, as well as persistent inflation in the regular versions of economic data, suggested that the process of Inflation slowdown Back to its 2% “goal could take longer than expected.”
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With persistent inflation, nourished observers expect decision -makers will take a slower approach for rate reductions in 2025. The probability of Fed detention rate for its next meeting in March was 68% Tuesday Afternoon, according to the CME Fedwatch tool.
