Recent statements by Donald Trump fuel the ongoing conflict with Fed Chairman Jerome Powell. Trump criticizes Powell and calls for rate cuts.
Conflict Between Trump and Powell
Trump continues to publicly clash with Fed Chairman Jerome Powell, frequently accusing him of being slow to reduce interest rates. Once again, Trump expressed his dissatisfaction through his platform, Truth Social, urging Powell to cut rates. He also announced his intention to file a lawsuit against Powell, accusing him of 'egregious' mismanagement of the Federal Reserve building renovations.
Rate Cut Expectations
Following the release of July inflation data, the potential for rate cuts appeared more likely. Wall Street Journal reporter Nick Timiraos commented that the Fed might not make it through its September meeting without a rate cut. His opinion is based on current inflation metrics which, while not without issues, do not raise alarms to prevent a rate cut.
Inflation Data and Market Impact
The July inflation figures increased expectations for a potential 25 basis point rate cut in September. The probability of this rate cut is estimated at 94.2%. Even though the inflation data were not high, they are sufficient to not rule out a cut next month.
The conflict between Trump and Powell continues to evolve amidst changing economic conditions. Rate cut expectations, reinforced by recent inflation data, may influence the actions of both the Fed and Trump moving forward.
