Key facts
- President Donald Trump threatened to halt trade with deficit nations if the Federal Reserve does not cut interest rates.
- Trump's demand for a rate cut followed a stronger-than-expected August jobs report.
- The president argued that the U.S. should have the lowest interest rates globally.
- Trump stated that halting trade with deficit nations would be preferable to tariffs.
- The comments come after Fed Chair Kevin Warsh adopted a hawkish stance on inflation.
President Donald Trump has demanded that the Federal Reserve cut interest rates, threatening to halt trade with countries that run a deficit with the U.S. if the central bank does not comply. Trump made the comments on social media following a stronger-than-expected August jobs report, which showed employers added 162,000 jobs, nearly triple the 56,000 forecast by economists. The unemployment rate held steady at 4.1%.
Trump urged Fed Chair Kevin Warsh and the central bank’s board to lower rates, arguing that a stronger U.S. economy should translate into lower borrowing costs and that the U.S. should have the lowest rate of any country. He tied his call for lower rates to U.S. trade deficits, stating that halting trade would be preferable to tariffs.
The comments follow the Jackson Hole Economic Policy Symposium, where Warsh adopted a hawkish stance, arguing that inflation remains stubbornly high. Following Warsh's comments, the implied probability of a 25-basis-point rate hike at the Fed’s September meeting rose to 58.4%. Trump's trade threat would have broad implications, as the U.S. runs trade deficits with many of its largest trading partners.