President Donald Trump said he will force the Federal Reserve to cut interest rates 'immediately'

On January 23, speaking at the World Economic Forum in Davos, former US President Donald Trump announced plans to pressure the Federal Reserve to immediately cut interest rates. His comments sparked tensions with the central bank and Chairman Jay Powell, setting the stage for a new confrontation over monetary policy. "I will immediately request a reduction in interest rates," Trump declared. "And likewise, interest rates should be lowered worldwide. Interest rates should follow us everywhere." Although Trump did not directly mention the Federal Reserve, his message clearly targets the organization, which has long prided itself on its independence from political influence. History of conflict with the Fed This is not the first time Trump has publicly clashed with Jay Powell, whom he appointed in his first term in office. Trump's criticism of Powell has always been consistent, often mixing personal criticism. In 2017, Trump likened Powell to a golfer who couldn't sink a putt, and in the years that followed, he called Powell a "fool" for opposing further interest rate cuts. The current standard interest rate of the Federal Reserve is in the range of 4.25% to 4.5%, after three interest rate cuts at the end of 2024. While the market predicts that the Fed will not take immediate action in the next meeting, traders are pricing in the possibility of interest rate cuts in mid-2025. According to CME Group's data, there is a 50% chance of another interest rate cut at the end of the year. Speaking to reporters after his speech, Trump emphasized his request to lower interest rates. "I hope the Fed will listen to me. They have to listen. Powell and I will have that conversation at the right time," he said. After Trump's remarks, the Dow Jones Industrial Average rose, while the two-year Treasury bond yield declined slightly, reflecting market expectations of potential policy changes. Inflation and economic instability Trump used his speech to criticize the inflation crisis, which he attributed to the policies of the Biden administration. 'The reckless spending under Joe Biden has created the worst inflation crisis in modern history,' he said. He noted that soaring food prices and other essential costs have put significant pressure on American families. The Federal Reserve also faces close scrutiny of how it handles inflation. Initially viewing the 2021 price increase as 'transitory,' the Fed then responded by raising interest rates sharply to 5.25 percent. Despite recent rate cuts, inflation remains above the Fed's 2% target. Stargate: A bold investment in AI In addition to monetary policy, Trump also emphasized the joint venture milestone worth $100 billion between SoftBank, OpenAI, and Oracle, called Stargate, aimed at developing artificial intelligence infrastructure in the United States. This initiative is expected to invest $500 billion and play a central role in Trump's strategy to unlock private capital and promote economic growth. "This is the future," Trump declared, emphasizing the need for the United States to lead in AI innovation. Stargate represents the largest public-private investment according to his vision to boost private capital. Reactions of experts and potential risks BlackRock CEO Larry Fink has offered a cautious yet optimistic view on Trump's proposals. Speaking to CNBC at Davos, he said, "Unlocking private capital will drive growth, but could also create new inflationary pressures." Fink warned that these pressures could drive interest rates higher, potentially destabilizing the stock market. He believes the bond market will be an important indicator of the path ahead for the economy. Looking forward When Trump's comments echoed throughout the financial markets, attention turned to the Federal Reserve and their response. The tension between Trump's active support for lower interest rates and the Fed's commitment to their dual mandate of price stability and maximum employment will shape the next phase of US economic policy. Meanwhile, initiatives like Stargate highlight the complex interaction between public and private investment in shaping a nation's economic future. DYOR! #Write2Earn #Write&Earn $BTC {spot}(BTCUSDT)