The US Federal Reserve has not reduced the interest again – and thus attracts Trump’s anger. But the relationship between the US President and Fed boss Powell has been poisoned for a long time.
Donald Trump and Jerome Powell will no longer become friends in this life. “Finally, do the right thing,” the US President rumbled on his platform Truth Social in the direction of the FED leader. Trump explained that the US Federal Reserve should reduce interest rates when the US tariffs began to find their way into the economy.
“Low interest type” Trump is outraged
The reason for the renewed tensions between the white house and Fed? The most recent meeting of the US Federal Reserve on Wednesday, on which the currency keepers around Jerome Powell did not touch the interest again. The zin break initiated in January goes into the extension.
And that doesn’t fit Trump at all. After all, the Republican had promised interest cuts in the election campaign “as they have never seen them before”. The hesitant procedure of the FED is now likely to give American consumers high credit costs and mortgage interest. The self -proclaimed “low interest type” Trump (“Low Interest Guy”) had probably imagined it differently.
FED expects higher inflation for Trump
The Fed itself blames Trump and his chaotic customs policy for their reserved interest rate. Powell emphasized at the press conference yesterday after the interest decision that it was difficult to predict how the economy will develop at the present time. But he also made it clear: “There will be tariffs and they tend to slow down growth. They tend to boost inflation.”
The US Federal Reserve is now expecting an average of 2.7 percent this year. For comparison: in December the forecast was still 2.5 percent. Powell made it clear that a “good part” of the inflation forecast goes back to the tariffs. The central bank boss further emphasized that the Fed could get closer to the goal of price stability, but could extend the tariffs there.
Trump: Fed bankers are “fools”
With this, Powell threw the feud shoe towards Trump – which, of course, reacted promptly as expected. The relationship between the two men has not only been tense since yesterday. Already during his first term as US president, Trump had repeatedly made fun of Powell. Once compared to Trump the Fed chairman with “a golfer who can’t put it”.
And when the Fed bankers refused to meet Trump’s desire for more aggressive and faster interest rate cuts, he insulted them as “fools” and “enemies”.
Two more interest reductions this year?
In the further course of the year, however, the Trump-Powell relationship could relax a little, as the FED leader openly showed himself to further monetary solutions despite the political turnaround in Washington. The new forecast of the FED continues to assume that the Leichen interest rate in 2025 will be 3.9 percent on average. This indicates two small interest reductions of the central bank this year.
The market is currently even expecting three key interest rates – in June, September and December. This emerges from the Fed Watch Tool of the CME Group.
Economic steam expected because of Trump’s politics
In fact, there are also aspects of Trump’s politics that speak for further interest rate reductions: In its new forecasts, the FED expects 1.7 percent of the US economy more slowly. In December, the central bank expected an increase of 2.1 percent.
If Trump’s trade policy really significantly weakens the growth of the US economy, this speaks for lower interest rates. At the moment, however, the US focal interest is still in a range of 4.25 to 4.5 percent – and thus as high as never before during Trump’s first term.
