US President Donald Trump is demanding the Federal Reserve to reduce interest rates by a full percentage point. This statement comes in light of fresh job market data indicating stability.
Trump's Demand for Rate Cuts
Following the release of May’s jobs report, Trump took to Truth Social to demand a full-point rate cut, stating, "Go for a full point, Rocket Fuel!" The report indicated 139,000 jobs were added last month, surpassing expectations.
Market Reaction to Trump's Statement
In the meantime, traders do not expect the Fed to cut rates at its next meeting. The market sees almost no chance for even a small cut. The last time such a significant reduction was made was in March 2020, during the initial wave of the pandemic.
Impact on the Economy and Inflation
Trump also pointed out that lowering rates would help manage upcoming debt, referencing both long- and short-term government borrowing. He believes that if inflation rises later, the Fed can always increase rates again. Trump’s assertion is that the Fed’s slow response to economic conditions is costing the US significant amounts.
Despite favorable job data and an increase in wages, Trump continues to insist on the necessity of reducing interest rates, believing it will benefit the economy in the short term.
