U.S. President Donald Trump Presses for Rate Cut Ahead of September FOMC, Warns of Trade Halt

[Financial News] U.S. President Donald Trump, who has been grappling with the government's debt burden, pressured the Federal Reserve to cut interest rates ahead of its rate decision. He said rates should be lowered to the world's lowest level and warned that otherwise the United States would halt trade with some countries.
According to foreign media outlets, including UPI, Trump met with reporters in Doonbeg, Ireland, on the 13th local time and referred to the Federal Open Market Committee (FOMC) meeting scheduled for the 15th and 16th. Asked about the possibility of a Fed rate hike, he said, "I don't know." Trump emphasized, "The U.S. economy is so strong that, regardless of their formula, we should have the lowest interest rates in the world." He added, "The credit of the United States is the best in the world. We are making other countries rich. We can end that situation in two minutes."
Trump also called for a rate cut just before boarding a flight to the United States that day. Asked whether he would carry out the plan to halt trade that he announced on Truth Social on the 4th, he replied, "Yes. I will do that with several countries." Trump said, "I have no choice. We don't want to run deficits with other countries. We want to run surpluses, or at least have balanced trade," adding, "But previous presidents allowed massive deficits, and we will not tolerate that." He continued, "So I will do that. It will happen over a period of time."
In a Truth Social post on the 4th, Trump blamed other countries for the United States' fiscal problems. He claimed, "The United States has to pay $650 billion a year for every one-percentage-point increase in interest rates," adding, "Because the United States has made everything work and provided enormous economic wealth to other countries that were close to failing, we should have the lowest interest rates in the world." He continued, "If rates are not lowered, we will halt trade with the countries with which we run deficits."
Trump has called for rate cuts since his first administration to reduce government interest costs and stimulate the economy. He has repeatedly pressured Kevin Warsh, who took office as Fed chair in May, to lower rates. U.S. government debt surpassed $40 trillion for the first time last month, while the price of 30-year U.S. Treasury bonds fell to its lowest level in 19 years this month. The price of 10-year Treasury bonds was also at its lowest level in three years as of the 12th. In an announcement on the 9th, the U.S. Department of the Treasury said it would triple the amount of government buybacks aimed at stabilizing Treasury prices.

The Fed has held its benchmark interest rate steady in the 3.5%–3.75% range for five consecutive meetings this year. An analysis of trading patterns among U.S. benchmark-rate futures traders using the CME FedWatch Tool, a market analysis tool provided by the Chicago Mercantile Exchange (CME), showed on the 13th that the probability of the Fed raising its benchmark rate by 0.25 percentage points this month stood at 86.2%. The probability of a hold was estimated at 13.8%.
Markets are forecasting that the Fed will raise rates to curb inflation for the first time in about three years since July 2023. The argument that a rate hike would weaken the economy has recently lost force because of employment growth. The U.S. consumer price index (CPI) rose 3.4% in August, according to data released on the 11th, remaining above the Fed's 2% target. Nonfarm payrolls increased by 162,000 in August from the previous month, according to data released on the 4th, far exceeding market expectations.
Pooja Sriram, an economist at Barclays Bank in the United Kingdom, forecast that the Fed would raise rates twice this year, in September and again in December. She warned, "If you are particularly concerned that inflation is not moving toward the 2% target quickly enough, a single rate hike cannot solve anything." Alicia Levine, chief investment officer (CIO) at BNY Wells Bank in the United States, said it "would not be good for the market" if Warsh raised rates this month and signaled that "there is still more work to do" to bring inflation under control.
Meanwhile, Kevin Hassett, chairman of the White House National Economic Council (NEC), told CNN on the 13th, "Trump respects Warsh's independence 100%," adding, "Whatever decision Warsh and the Fed make, we will support it 100%." Regarding Trump's comments about halting trade, he said, "I don't expect trade to go to zero, but I think the president has a very strong view that interest rates need to be much lower."

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