- President Donald Trump expressed confidence the Federal Reserve will start lowering interest rates, a day after he met with central bank Chair Jerome Powell.
- White House budget director Russell Vought kept up the heat on the Fed’s renovation project, pushing the case for a review while pressing for lower interest rates.
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One day after meeting with Jerome Powell, the chair of the central bank, President Donald Trump said Friday he is certain the Fed will begin cutting interest rates.
According to the president, the conversation went well and he thinks the Fed is prepared to give him the monetary policy easing he has been requesting for months.
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“I believe our meeting on interest rates went really well. Trump told reporters, “And [Powell] told me… very strongly, the country is doing well.” “I got that to mean that I think he’s going to start recommending lower rates.”
As they watch how Trump’s tariffs affect inflation, Powell and his colleagues policymakers have been hesitant to cut rates. Powell has actually argued against cutting, pointing out that the economy is robust enough to support higher rates as policymakers monitor the data.
Russell Vought, the White House budget director, continued to criticize the Fed’s reform initiative prior to Trump’s comments, arguing for a central bank review and a reduction in interest rates.
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Vought repeated Trump’s request for the Fed to begin loosening monetary policy in order to support the housing market and the economy in general.
“There’s a whole host of issues with regard to the Fed, and we want to make sure that those questions get answered over time,” Vought stated during his “Squawk Box” interview. “This is not a pressure campaign on the Fed chairman.”
After months or possibly years of hostility between the Powell Fed and the Trump White House, the tone after Thursday’s meeting was more accommodative.
A Fed spokesman said in a statement released Friday that the central bank was “honored” to welcome Trump and other Republican officials, and both sides described the tour as pleasant.
The Fed spokesperson stated, “We appreciate the President’s encouragement to finish this significant project.” “We remain committed to continuing to be careful stewards of these resources as we see the project through to completion.”
Nevertheless, Vought stated that the White House intends to carry out Treasury Secretary Scott Bessent’s determination that a review of “the entire” Federal Reserve is necessary.
Along with the building project and interest rate problems, officials have also blasted the Fed for its ongoing operational deficit while interest rates have remained high. In the past, the Fed has returned to the Treasury the profits it has made from its investments; however, in 2024, it will have a deficit of over $80 billion since the interest it pays on bank reserves has exceeded the interest it receives from investments.
“We’re going to continue to articulate our policy concerns with regard to the Fed’s management,” Vought stated. You cannot simply be at the Fed and expect to be free from criticism. The political system in the United States does not have that.
Trump also said he is confident Powell and his colleagues would support the president’s position on rates during the meeting on Thursday.
At the time, Trump told reporters, “I think the chairman will do the right thing.” “I mean, it may be a little too late, as the expression goes, but I believe he’s going to do the right thing.”
Trump has gradually backed off threats to try to oust the Fed head, despite the past animosity, and he reaffirmed on Thursday that he doesn’t think Powell needs to step down.
When the Fed meets next week, futures markets are giving almost no possibility of a rate drop, with September being the next likely month. The likelihood of another cut before the year ends is also reflected in market pricing.
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