Trump Demands Lower Rates as Fed Prepares for Policy Meeting

By Staff, Agencies

US President Donald Trump said Sunday that the United States should have the lowest interest rate in the world, stepping up his pressure on the Federal Reserve ahead of its policy meeting this week despite economic data pointing to persistent inflation.

Speaking to reporters at the Irish Open golf tournament in Doonbeg, Ireland, Trump said he did not know whether the Fed would raise interest rates when policymakers meet this week. He argued, however, that the US should have the world's lowest borrowing costs regardless of what economic data indicate, according to a reporting by Reuters.

Trump has repeatedly accused the Federal Reserve of maintaining interest rates at levels that benefit other countries at the expense of the US economy.

“I know more about formulas than anybody, and with the best credit in the world, we make other countries rich,” Trump said, as per Reuters.

The Fed's Federal Open Market Committee is set to announce its latest decision on Wednesday. Its federal funds target range currently stands at 3.5%-3.75%.

The meeting comes days after the Labor Department reported that the Consumer Price Index, a key gauge of inflation, recorded its largest increase in four months.

The latest data have reinforced expectations that policymakers will keep rates elevated or potentially raise them as they attempt to contain price pressures. Inflation has remained persistent amid Trump's higher import tariffs and rising energy prices linked to the Iran war.

Federal Reserve officials have warned that allowing inflation to remain high for an extended period could make it more difficult and costly to return price growth to the central bank's target.

The Fed's decision also comes at a politically sensitive moment, with US midterm elections approaching. The elections will determine whether Republicans retain their narrow majorities in both chambers of Congress.

A rate increase could add to voter concerns over affordability, while Trump's approval ratings have declined as inflation has persisted.

Trump has argued that the current interest-rate environment is unfair to the US, saying the country's strong credit position should allow it to borrow more cheaply.

He has made increasingly direct demands for the Fed to lower interest rates. Two weeks ago, Trump warned on social media that he could halt trade with countries with which the US runs a deficit unless the Fed cuts rates.

Trump's intervention has raised questions over the extent of pressure his administration is placing on the central bank, which is intended to operate independently of the White House.

Trump was a frequent critic of former Fed Chair Jay Powell. His relationship with the Fed's leadership has become more supportive since Kevin Warsh, Trump's pick to lead the central bank, took over earlier this year.

However, Trump has continued to make his preference for lower rates clear.