According to Golden Finance, on June 11 local time, US President Trump posted on his social media platform “Real Social”, calling on the Federal Reserve to lower interest rates. He said that the latest data of the US consumer price index (CPI) performed well and the Federal Reserve should cut interest rates by one percentage point (that is, 100 basis points).
Trump pointed out that it is crucial that the interest rate cut will enable the United States to save a large amount of money on the payment of interest on debts that are due soon. He also mentioned that the United States currently holds a large amount of short-term debt and he prefers long-term low-interest debt. If the interest rate drops by 1%, the interest on the debt paid by the United States will decrease by 1% accordingly. If the interest rate is cut by 2%, more interest expenses will be saved.
On the 6th, Trump also complained on social media, calling the “Mr. Too Late” of the Federal Reserve a disaster, accusing Europe of cutting interest rates ten times while the United States has not once, and demanding that Federal Reserve Chair Powell cut interest rates by a full percentage point.
Recently, data released by the Bureau of Labor Statistics of the United States showed that the year-on-year growth rate of the US CPI in May was 2.4%, lower than the expected 2.5%. Core CPI (excluding food and energy, which fluctuate more) rose by 2.8%, remaining at its lowest level since March 2021 and also lower than the expected 2.9%. After the release of this data, traders increased their bets that the Federal Reserve would start cutting interest rates in September. Currently, the possibility of a rate cut in September has risen to 75%, and the market basically expects the Federal Reserve to cut interest rates twice this year.
The Federal Reserve will hold its latest interest rate decision meeting from June 17th to 18th. Currently, the market generally expects that the Federal Reserve will not cut interest rates at this meeting, and the probability of a rate cut is zero. Data from CME Group shows that traders generally expect the Federal Reserve to start cutting interest rates in September. Trump’s continuous calls for interest rate cuts highlight the differences in monetary policy between him and the Federal Reserve. The future decision-making direction of the Federal Reserve and its impact on the US economy and debt situation have drawn much attention from all sectors.
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