Trump Calls for Powell to Lower Rates

The Federal Reserve has been urged to reduce interest rates by President Donald Trump. He mentioned December statistics on CPI that stated U.S. inflation at 2.7%, which supports a more relaxed rate policy.

Is Trump Correct About Rate Cuts with Inflation Cooling?

On a Truth Social post, Trump referred to inflation percentages as great and asked Fed Chairman Jerome Powell to reduce rates by a significant amount. He states that any further delay in cutting such rates would be detrimental to growth and make borrowing costs excessive.

The statements were made after the released December U.S. CPI showed that inflation is 2.7% per annum. The data was in accordance with market expectations and indicated that the inflation is not escalating but stable.

The core CPI, without including food and energy, narrowed to 2.6% per annum. That number was lower than expectations and solidified the perception that the pressures on prices were gradually cooling.

Trump quoted the CPI data as evidence to show that Fed is behind the curve. He said Powell is “Too Late,” and indicated that the Fed should cut the rates to boost growth and encourage credit demand.

Bitcoin Rises Amid Rate Cut Expectations Rises on Inflation

Trump also highlighted strong growth records and attributed tariff policies as the boost for local production as inflation remain under control. His comments are aligned with the optimism in the market as the drop in inflation causes rate cut hopes in 2026.

The inflation report had a positive impact on markets, as Bitcoin surged beyond $92,000 shortly after the publication of the data, which was an indication of a fresh risk appetite.

Reduced rates generally increase liquidity and promote equities, crypto assets, and risk-sensitive markets. Nonetheless, it is not likely that the Fed will cut the rate immediately.

The FedWatch of CME indicates that markets are willing to see the Fed maintain a steady rate at its next meeting.

The tool thinks there is approximately a 95% chance that there will be no change after the January 2026 meeting of the Federal Open Market Committee. There is also a low probability of a 25 basis points reduction being priced.

Can the Fed Remain Resistant to Trump’s Pressure?

The latest minutes released by the Fed indicate that the officials would like to see more signs of a drop in inflation. There is a lot of caution among policymakers in the wake of a number of cuts that were effected last year.

Large banks share similar sentiments, with JPMorgan no longer anticipating Fed rate cuts even after weaker inflation reports. Uncertainty relating to fiscal policy and tariffs has also been mentioned by some of the officials. They desire an understanding of how these factors can affect prices in the next few months.

The remarks of a sitting president tend to influence the market direction. Such statements are keenly monitored by traders as an indicator of the direction of future policies.

The rate cut expectations may become stronger later in the year in case inflation remains the same or keeps dropping. The recent CPI report provides solid evidence for those who support rate cuts.