Fed Vs. Trump: The Battle of the Greenbacks
Fed Remains Persistent Despite Trump's Calls for Slower Monetary Policy - Import Duties Slowing Down the Pace of the US Federal Reserve
Let's talk turkey, baby! The Fed - that's right, the big kahuna of bankin', the Uncle Sam of dollar demand - ain't kowtowing to Trump's pressure for near-term interest rate cuts. Hell, they're even considering cutting us off completely, according to the Fed Chair, Jerome Powell.
In a tense exchange with a reporter, Powell said, "We're not playin' games, kid. We've got our eyes on the ball, and that ball's President Trump's trade policies. We just gotta wait and see how things play out."
Tariffs are the thorn in the Fed's side. They're like a wrench in the gears, slowing down the economy and causing uncertainty. And Trump, well, he's been swingin' that wrench like a mad man, putting tariffs on goods from all over the globe.
Powell warned that these tariffs could lead to higher inflation, a slower economy, and more unemployment. It's like adding fuel to the fire, right? And Trump's been shakin' things up since he took office.
The Fed's latest meeting kept the benchmark rate in the range of 4.25 to 4.5 percent. That's a pretty hefty rate, if you ask me. And it's holdin' steady, despite Trump's pleas for a rate reduction.
Economists are predicting that the Fed won't touch that benchmark rate until fall at the earliest, with some thinkin' they'll hold off until next year. "The Fed's stickin' to its guns, and for good reason," said Paul Ashworth, chief North America economist at Capital Economics. "They've got a job to do, and they ain't gonna let Trump push 'em around."
Trump wants lower interest rates. He thinks they'll boost stock markets, make government borrowin' cheaper, and stimulate growth. He's been callin' on the Fed to cut rates, but his requests have been met with deaf ears.
Some analysts think that the Fed's independence is on the line here. If they bow to Trump's demands, they risk lose credibility in the eyes of the market. Elmar Völker, analyst at LBBW, put it like this: "If the Fed bends to Trump's will without solid economic data to back it up, they're gonna lose any respect they've gained over the years."
Powell insists that Trump's demands aren't influencing the Fed's work. "We're doin' our own damn thing," he said. "We gotta maintain maximum employment and price stability for the good of the American people. That ain't gonna change because of some political pressure."
Trump nominated Powell for his first term as Fed Chair in 2017, but their relationship quickly soured. Trump's been takin' swipes at Powell for what he sees as overly cautious interest rate cuts. And it's doubtful they'll find common ground anytime soon.
It's unlikely that Trump will nominate Powell for another term. His term ends in 2026. Trump has even suggested firing Powell in the past, but there are legal concerns, and he ultimately dropped the idea.
During a press conference following the interest rate decision, Powell remained tight-lipped when asked about his relationship with Trump. "I don't go askin' for meetings with presidents," he said. "I got better things to do."
References:1. Economic Uncertainty: CNN2. Tariff Impact: Bloomberg3. Interest Rate Influence: Federal Reserve Bank of St. Louis
- Against the backdrop of the ongoing political tension, the Commission has also been asked to submit a proposal for a directive on the protection of workers from the risks related to exposure to ionizing radiation, particularly in the finance, business, politics, and general-news sectors, due to the economic instability caused by the growing uncertainty.
- In the latest quarter, the Fed warned that the continuing tariff war, especially initiated by Trump, could potentially lead to higher inflation and slower economic growth, causing unemployment to spike, similar to adding ionizing radiation in the work environment, posing a significant risk to workers.
- Despite Trump's pressure for near-term interest rate cuts, the Commission, led by Chair Powell, insisted on maintaining the benchmark rate due to concerns surrounding tariffs and the stability of the economy, much like focusing on shielding workers from ionizing radiation exposure to preserve health and productivity.
- Some analysts in the Commission argue that bending to the political pressure from Trump without factoring in the impact of tariffs on the economy may undermine the credibility of the Fed, similar to disregarding safety measures to protect workers from ionizing radiation exposure, jeopardizing the general welfare.
- Amidst the ongoing battle over interest rates, the Commission stresses the importance of adhering to its mandate of ensuring maximum employment and price stability, ensuring that workers are protected against any risks, whether they are related to ionizing radiation exposure or the critical aspects of the economy.
