Trump ‘may have to force' Fed on interest rates
Donald Trump said he 'may have to force' the US Federal Reserve to change interest rates after labelling its chair Jerome Powell a 'numbskull'.
In his latest attack on the central bank, the president said Mr Powell, who the US leader has repeatedly criticised, should slash rates by a whole percentage point and blamed him for keeping America's debt costs high after better than expected inflation data.
'We are going to spend $600bn (£441bn) a year because of one numbskull that sits there, [saying] 'I don't see enough reason to cut the rates',' he said. 'I may have to force something.'
Mr Trump's criticism of the Fed chair has previously knocked investor confidence. Since then, the president has been careful to signal that he is not preparing to sack Mr Powell despite the criticism.
On Thursday, Mr Trump said: 'The fake news is saying, 'Oh, if you fired him, it would be so bad. It would be so bad.' I don't know why it would be so bad, but I'm not going to fire him.'
Earlier this spring, Mr Trump sent markets into turmoil when he lashed out aggressively at the Fed chair and threatened to sack him for not cutting interest rates quickly enough.
In April, he wrote on his Truth Social platform: 'Jerome Powell of the Fed, who is always TOO LATE AND WRONG, yesterday issued a report which was another, and typical, complete 'mess!' … Powell's termination cannot come fast enough!'
The post was a major escalation in a long-running attack that extended back to Mr Trump's first term, when he accused Mr Powell of being the 'biggest threat' to his economic agenda after he raised interest rates.
His threats earlier this year triggered a rise in yields on US Treasuries as bond investors were spooked over threats to the Fed's independence - forcing Mr Trump to dial down his rhetoric.
The Fed will meet next Wednesday to make a fresh decision on interest rates. It voted to hold interest rates at 4.5pc at its last meeting after halting a series of interest rate cuts that it began last year.
Mr Powell has adopted a 'wait and see' approach on rates, citing major economic uncertainty in the wake of Mr Trump's trade war.
Mr Trump's aggressive tariffs are widely expected to drive up inflation as they will dramatically increase the costs of imported goods.
However, the impact is yet to show up in the trade data. Official figures released on Wednesday showed inflation climbed to 2.4pc in May, up from 2.3pc in April but lower than the 2.5pc that economists had expected.
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