Trump Pressures Fed Again to Cut Rates: Will Cut Trade Ties with Trade Deficit Countries Otherwise

BlockBeats News, September 5th. On Friday, U.S. President Trump once again publicly called for a significant interest rate cut by the Federal Reserve. He pressured the Fed and Chair Jerome Powell, stating that the U.S. should have the world's lowest interest rates. He even threatened that if other countries continue to maintain a huge trade surplus with the U.S., the U.S. may stop trading with countries that have a trade deficit.

This stance is in stark contrast to the strong U.S. employment data released on the same day. The U.S. added 162,000 non-farm jobs in August, far exceeding the market's expectation of 56,000 jobs. The July data was also revised significantly, with a previous loss of 23,000 jobs turning into a gain of 21,000 jobs, keeping the unemployment rate at 4.1%.

The robust employment data further dampened market expectations of a Fed rate cut and prompted a reassessment of the monetary policy path in September. The market is now awaiting the release of the August CPI data next week to assess the inflation trend and the Fed's future policy direction. Bloomberg Economics predicts that the overall CPI year-on-year growth rate in August may rise to 3.4%, while the core CPI year-on-year growth rate is likely to decrease to 2.4%.

Market participants believe that Trump's continued calls for rate cuts are in clear contradiction to the current resilience of the labor market and inflation that remains above the Fed's 2% target. Before the September Fed meeting, the CPI and energy price trends will be key variables determining policy expectations.