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In a switch, Trump approves Fed’s decision to hold interest rates steady
U.S. President Donald Trump looks on as he signs an executive order in the Oval Office at the White House in Washington, U.S., Jan. 31, 2025.
Carlos Barria | Reuters
President Donald Trump agreed with the Federal Reserve for its decision last week to leave interest rates unchanged, an early pivot from his previous demand that the central bank ease “immediately.”
In an exchange with reporters Sunday, Trump said holding its key borrowing level in a range between 4.25%-4.5% was the correct move for the Fed.
“I’m not surprised,” he said regarding the decision, according to multiple reports. “Holding the rates at this point was the right thing to do.”
The statement stood in stark contrast to one Trump delivered when speaking remotely to the World Economic Forum in Davos, Switzerland. In a Jan. 23 appearance, Trump said he would “demand that interest rates drop immediately.”
The president has no direct authority over the Fed, though he does nominate the chairman as well as other board members. Current Chair Jerome Powell is a Trump nominee, and a frequent target of the president’s criticism.
Markets don’t expect the Fed to lower rates until at least June. In his post-meeting news conference last Wednesday, Powell repeatedly asserted that the Fed doesn’t need to be in a “hurry” to lower further after shaving a full percentage point off the fed funds rate from September to December in 2024.
The Fed’s decision-making got potentially more complicated after Trump on Saturday said he would impose aggressive tariffs against Canada, Mexico and China, the three largest U.S. trading partners. Economists worry that the tariffs will drive up prices at a time when inflation has shown signs of easing.
In a surprising turn of events, President Trump has approved the Federal Reserve’s decision to keep interest rates steady. This decision comes after months of criticizing the Fed for raising rates too quickly, causing tensions between the President and the central bank.
Trump’s approval of the Fed’s decision signals a shift in his stance on monetary policy, as he has previously called for lower interest rates to stimulate economic growth. This change in attitude could be a sign that the President is beginning to trust the Fed’s judgment and is willing to work with them to achieve economic stability.
The decision to hold interest rates steady was made at the Fed’s recent meeting, where they cited concerns about slowing global growth and trade tensions as reasons for their cautious approach. Trump’s approval of this decision could help ease concerns about potential interference in the Fed’s independence and provide reassurance to investors and markets.
Overall, this unexpected move by President Trump to support the Fed’s decision to keep interest rates steady could be a positive development for the economy and financial markets. It will be interesting to see how this newfound cooperation between the White House and the Federal Reserve plays out in the coming months.
Tags:
- Trump administration
- Federal Reserve
- Interest rates
- Monetary policy
- Economic decisions
- President Trump
- Federal Reserve decision
- Financial markets
- Economic stability
- Federal Reserve interest rates
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