Opinion: Powell Set to Disregard Trump's Rate Cut Plea

BlockBeats News, January 30th. Economists have stated that the Federal Reserve will clash with President Trump. Despite the U.S. President's call for a "substantial" cut in borrowing costs, the market expects the Federal Reserve to keep interest rates unchanged. The Federal Reserve's decision on Wednesday local time is the first decision after Trump's return to the White House. A major sign of Trump's return to the White House is the issuance of numerous executive orders as he seeks to advance his agenda in Washington.

Analysts have noted that Federal Reserve Chairman Powell must resist White House pressure if he wants to maintain market confidence and avoid triggering a new round of inflation. Claudia Sahm, Chief Economist of New Century Advisors and former Federal Reserve official, stated: "When the President starts to intervene in monetary policy decisions, the results are often disastrous."

Despite a significant easing of inflation, allowing the Federal Reserve to cut rates by 1 percentage point last year to a range of 4.25% to 4.5%, which is still above the Federal Reserve's 2% target. Although the market generally expects the Federal Reserve to maintain interest rates on Wednesday, Trump has explicitly stated that he wants a faster rate cut.

Last week, Trump stated: "I think I know more about interest rates than they do, and I certainly know more about interest rates than the person primarily responsible for making that decision. I want to see (interest rates) drop significantly." Lawrence Summers, who served as Treasury Secretary during Bill Clinton's presidency, believes that this "open government intervention is very likely to backfire." He added: "The Federal Reserve will not listen."