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Cryptopolitan 2025-01-24 00:54:20

President Trump says he will force the Federal Reserve to cut interest rates “immediately”

While speaking at the World Economic Forum at Davos on Jan. 23rd, president Donald Trump announced plans to force the Federal Reserve into cutting interest rates without delay, escalating what will likely become a renewe d battle with the central bank. “I’ll demand that interest rates drop immediately,” Trump said . “And likewise, they should be dropping all over the world. Interest rates should follow us all over.” While he didn’t explicitly name the Federal Reserve, the implication was clear, setting the stage for friction with Fed Chair Jay Powell, who has repeatedly said the institution’s independence from political interference. During his first term that started in 2016, Trump frequently criticized Powell, whom he appointed, calling him a “bonehead” and publicly mocking his decision-making. He even compared Powell to a golfer who can’t sink a putt once in 2017. The Fed’s current benchmark interest rate stands between 4.25% and 4.5%, after three cuts in late 2024. While markets are predicting no immediate rate adjustments during the meeting, traders anticipate a cut as early as June. CME Group data places the probability of another cut before the end of the year at 50%. Speaking to reporters later in the day, Trump doubled down, saying, “I expect the Fed to listen to me. They must. Powell and I will have that conversation at the right time.” The Dow Jones Industrial Average rose during his speech, while the two-year Treasury yield, which often reacts to policy signals, edged lower. Inflation, private capital, and economic uncertainties Trump also addressed the ongoing inflation crisis, blaming it squarely on the Biden administration. According to Trump, “wasteful deficit spending” under former President Joe Biden created what he called “the worst inflation crisis in modern history.” Food prices, along with nearly every other essential item, skyrocketed, he said, leaving American families to shoulder the burden. The Federal Reserve has faced its share of criticism over inflation as well. The central bank initially dismissed the 2021 inflation surge as “transitory,” a decision that led to aggressive interest rate hikes totaling 5.25% before the recent cuts. Inflation is still above the Fed’s 2% target. During his speech, Trump also touted a $100 billion joint venture between SoftBank, OpenAI, and Oracle, named Stargate, to develop artificial intelligence infrastructure in the U.S. The project plans to eventually invest $500 billion, and is a part of Trump’s vision to unlock private capital and spur growth. Larry Fink, CEO and founder of BlackRock, weighed in during an interview with CNBC at the Davos event. “I’m cautiously optimistic,” he said. “But there are scenarios where this could be pretty bad. Unlocking private capital will drive growth, but it could also create new inflationary pressures.” Larry warned that these pressures could push interest rates higher, potentially destabilizing equity markets. He pointed to the bond market as an indicator of what could come next. A Step-By-Step System To Launching Your Web3 Career and Landing High-Paying Crypto Jobs in 90 Days.

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