US President Donald Trump demanded that the Federal Reserve cut rates immediately on Thursday, citing falling oil prices and asserting he understands monetary policy better than the central bank’s leadership.
“With oil prices going down, I’ll demand that interest rates drop immediately,” Trump told the World Economic Forum in Davos where he appeared virtually, adding rates “should be dropping all over the world.”
At a White House event following his Davos address, Trump claimed in an apparent reference to Fed Chairman Jerome Powell: “I think I know interest rates much better than they do, and I think I know it certainly much better than the one who’s primarily in charge of making that decision.”
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The demand comes five days before the Fed’s first policy meeting under Trump’s new administration, where officials are widely expected to keep rates steady. The Fed cut its key rate to 4.25%-4.5% in December, marking a full percentage point reduction throughout 2024.
Fed officials have signaled caution about further cuts while inflation remains above their 2% target. Several policymakers cited uncertainty about Trump’s trade, immigration, and regulatory proposals in their December forecasts. New York Fed President John Williams emphasized that potential changes in government policy make it particularly challenging to guide monetary policy.
Fed Governor Christopher Waller, a Trump appointee, remains optimistic about rate cuts despite broader concerns about Trump’s trade policies. On January 16, Waller told CNBC that rate reductions could come in the first half of the year if inflation data remains favorable.
Earlier, on January 8, he dismissed widespread concerns that Trump’s proposed tariffs would fuel inflation. “If, as I expect, tariffs do not have a significant or persistent effect on inflation, they are unlikely to affect my view of appropriate monetary policy,” Waller said.
The Fed, designed to operate independently, does not have to follow presidential instructions — and presidents typically avoid direct criticism of Fed policy to protect its independence.
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