Right before the presidential election, Donald Trump, the Republican candidate, has expressed dissatisfaction with the Federal Reserve’s recent cut on its benchmark interest rate by 50 basis point. Trump pointed that this move could either indicate an economical uncertainty or a political move.
Trump noted that the economy would have to be really bad if the Federal Reserve cut the interest by that much.
Previously Trump has voiced his disagreement with Jerome Powell, chairman of the Federal Reserve, calling out the independent central bank of being politically biased. In an interview with Bloomberg News, Trump warned Powell to not reduce the interest rates before election, while also mentioned that he would let Powell complete his term as chairman once he has been elected if the Fed’s chair complied.
During a conversation with Fox Business Network, Trump implied that he plans to replace Powell, accusing him of being political and helping the Democrats by lowering interest rates.
The Federal Reserve’s decision to cut interest rates by 50 bps was the first rate reduction in more than four years. This came as a surprise to Wall Street analysts who had anticipated the cut to be around 25 basis points.
Prior this month, Trump revealed that he would prefer the Federal Reserve to leave the interest rates intact before the 2024 presidential election, although investors and members of Congress were expecting a cut.
There was growing anticipation among investors for a 50 bps interest rate cut, and this prospect may have influenced the Federal Reserve’s decision.
