President of the United States Donald Trump switched his position on the Federal Reserve System again, posting a message on social media on Wednesday, February 12, that interest rates need to come down.
In a morning post on Truth Social, Mr. Trump stated that the cost of borrowing should be lowered, something that would go hand in hand with upcoming tariffs.
It is worth noting that the mentioned statement by the President of the United States was made the day after Fed Chairman Jerome Powell said that policymakers should not rush to cut interest rates, as they are watching progress in inflation. Other officials stated that they are evaluating the potential impact that tariffs will have on prices. At the same time, Jerome Powell prefers to avoid direct answers to such questions. Many economists have repeatedly warned in recent months that Washington’s tightening tariff policy could trigger an acceleration of inflation in the United States. The potential implementation of the corresponding scenario would be a painful blow to US consumers, who demonstrate what can be called financial and emotional fatigue from rising prices.
The post, which was published by Donald Trump on Wednesday, is notable in the sense that in this case, it captures an unambiguous signal of a change in the position of the White House regarding monetary policy.
It is worth noting that shortly after taking office, Mr. Trump demanded an immediate cut in interest rates. At the same time, he has no direct authority over the Fed. Then this position changed. A few days after the first statement, Donald Trump noted that the central bank of the United States had done the right thing by deciding to keep the cost of borrowing at the same level. The corresponding decision was made by the US financial regulator at the January meeting on monetary policy.
In subsequent remarks, Treasury Secretary Scott Bessent stated that the Donald Trump administration is more focused on lowering the yield on the 10-year Treasury than on the short-term fed funds rate.
Mr. Trump’s post published on Wednesday signals that the White House is returning to putting pressure on the US financial regulator to ease monetary policy.
Market pricing assumes that the Fed will stay on hold until June or July. It is also stipulated in this case that the central bank of the United States will not decide on lowering the cost of borrowing for the rest of 2025.
Some economists, including experts from Bank of America, predict that the US financial regulator will not cut interest rates at all in the current year. In the relevant context, they mention taking the benchmark overnight borrowing rate down a full percentage point in 2024.
The Fed is currently taking a wait-and-see attitude. The central bank of the United States is striving to fully assess and study the consequences of implementing the economic strategy of the Donald Trump administration. Only after that, the US financial regulator will make any decisions regarding monetary policy. The corresponding position is unequivocally declared both at the level of formulations that are semantic components of the official rhetoric of the Fed and in private statements by officials of the central bank of the United States.
