Trump: Powell could lower interest rates 1% to 2%

Great post! My key point is that the effect of the current rounds of tariffs has been underwhelming. I agree with your points and would add a few more inflationary factors that are now in play: low oil prices are gone, there’s a new war, unemployment is near record lows while we’re deporting undocumented workers, and there’s an unprecedented global boom in defense spending—mostly debt-financed.

And of course, we should never underestimate the Trump WFT factor. His one consistent superpower is the ability to deliver shock to the system.

As for dropping rates or not... I’m somewhat on the Fed’s side as well.

Yep, everything you said is pretty much accurate. Time for impact to be felt is the big unknown (especially with oil now being 10%+ higher than when the 10% tariffs and initial sticker shock hit/started to show up in data).

The "10%" may have been baked in, but I believe the fed is referring to the upcoming promise by the administration to simply tell all non-negotiating countries what their future rate(s) will be at the July deadline. Then there is the EU and China "pause" deadline on top of that. Anything above 10%, especially from the larger players, must, by the very nature of price increases in the supply chain, must have an impact on inflation. Be it one time or prolonged, based on fluctuations in the rate proposals, the impact will occur. The question for economic forecasters is: how much will it impact the consumer, and when?

I am NOT an economist, so everything I say needs to be taken with that in mind, but I am just attempting to apply common sense to a situation that is way above my pay grade (i.e. decisions in back rooms, offsetting expectations, etc). If the job of the fed it to keep inflation down without a hit to employment, then major, looking uncertainty makes that VERY difficult. If there was a fixed "China tariff will be 55% from August to December, then drop to 10% moving forward", etc, etc, then economic models could be created and decisions made about where/when inflation would hit. Rates could be adjusted accordingly.

However, the president proposed, and has, via Truth social, on many occasions, lowering rates now and then "simply raising" them later if inflation is reintroduced. Now, that makes sense to the average citizen. That is how gas prices work. That is how grocery prices work. BUT, you can't run an economy with rates flying all around....the time it takes those changes to work themselves through the economy is WAY too long. Countries cannot be run like businesses. Business is fast, country economics is slow. That's the frustrating part about trying to introduce business theory into large economic policy. If it were as easy as "bam, 15% of the labor force is cut, this plant is now closed, we are building another in this country for tax reasons, etc..." then a quarter or two would 'rofht' the ship. But our economy is far too large to be manipulated like that . Unlike in business, even HUGE businesses, where (at least inn theory) one person (or a handful of people) can dictate a change and everyone either accepts it or quits, our country has massive roadblocks to such plans. Some may say that is not a good thing, but it certainly prevents those changes you Don't want to see from happening every x years when new people move into government.

Do I think the FED cloud have cut already? Sure. But I completely understand the position of "we have to wait and see because a big stick is looking ahead of us and just keeps changing position".

Okay, back to your regularly schedule programming

I think that the tariff inflationary effect has mostly been baked into the economy. This presupposes that there is no future increase in the tariffs. According to the Fed, a tariff rate of 10% will cause a 1% increase in inflation, and this is a one-time shock. This occurred, but it didn't really show up in the headline data as it was countered by anti-inflationary effects such as a high bank rate, a slowing economy, and a huge drop in the price of oil.

to his premise. That would be a MASSIVE shock to the system and we STILL don't know how much all of our goods are going up due to tariffs.



FWIW, the title of this post got it wrong.....Trump isn't saying lower rate BY 1-2%, he is saying lower them TO 1-2%. Sigh.

I hope everyone has a nice weekend!

On a trading perspective, Trump is right, FED moving rates up and down brings volatility
and much needed trading opportunities...
On an economic perspective, FED should stick to hard data, stability is good for
everyone...
On a geopolitical front, excellent work from Trump, keep doing what your doing...

Is the equation so simple….

Sometimes you gotta be nasty to the numbskulls!

Shame on Trumpy for blaming Biden and any other person for his failing, so so irresponsible

Ramblings, no effects on market

TACO Trump is becoming a sovereign risk.

He doesn't seem to understand the function of interest rates

Any way dollar is going down

And did you know that is something else I know the credit

But you people you counted this world and Trump you need to be added votes

This guy still talking about interest rate lolzzz some one pls tell him interest rate cut is next month ….. zZzzZzz so persistent dumb guy zZzz

I agree, Powell needs to start lowering rates, period.

Bullish... Buy GOLD. Monday will be gold big day

Buy maximum on the monday morning XAUUSD. Gold is bullish will reach another high

Fed is right.
If he lower interest rate now it could shift stock market higher and trillion of dollars could goes into billionaire's pocket. You don't want Fed to do that.