Fed Defies Trump’s Demand for Lower Interest Rates (Trump Responds) (Uncut) 01-30-2025
Fed Defies Trump’s Demand for Lower Interest Rates (Trump Responds)
The Federal Reserve has defied President Trump’s demand to lower interest rates. So, President Trump was very upset. He said that he’s going to take matters into his own hands to lower inflation.
So, I’m going to show you President Trump’s response. But first, I want to show you the highlights of the FOMC press conference. So, this is going to help you understand the full story, what is going on.
So, in this first video clip, it’s the Federal Reserve saying that they’re going to cut interest when there’s more progress on inflation. Okay, now the next Federal Reserve meeting takes place on March 19th. And of course, the big question is, are they going to cut interest rates at that next meeting? And you’re going to see Powell in this clip.
He’s going to say that they’re not in a hurry to cut interest rates. So, as I mentioned, the economy’s strong, the labor market’s solid, downside risks to the labor market appear to have abated. And we think disinflation continues on a slow and sometimes bumpy path.
That tells me and the other members of the committee, the broad sense of the committee actually is that we don’t need to be in a hurry to adjust our policy stance. Okay, so you just saw Jerome Powell, Chair of the Federal Reserve, saying that they’re not in a to cut interest rates, right? But you probably also saw the video clip of President Trump demanding lower interest rates immediately. So, what’s up with that? What’s up with the disconnect? So, in this video clip, you’re going to see Jerome Powell, Chair of the Federal Reserve, saying that they’re just going to focus on the work and that he’s had no contact with President Trump.
Mr. Chairman, at an event in Davos, or from to Davos anyway, the President said he’ll demand that interest rates drop immediately. So, I guess I have a three-part question. Has the President done this to you as he made that demand? Secondly, what is your response to that? And third, what effect, if any, does a President making these kind of remarks have on policy? Thank you.
Three questions. I’m seeing it really as one question though. So, I’m not going to have I’m not going to have any response or comment whatsoever on what the President said.
It’s not appropriate for me to do so. The public should be confident that we will continue to do our work as we always have, focusing on using our tools to achieve our goals and really keeping our heads down and doing our work. And that’s how we best serve the public.
Can you just comment on whether he’s physically communicating this demand to you? I’ve had no contact. Thank you. Thanks.
Now, in this video clip, Jerome Powell gets asked about the inflation risks tied to Trump’s policies. So, you’re going to see, I mean, this was not a shocker. This was expected that Powell says that the committee is just going to take a wait-and-see approach.
So, please take a look. So, how would you characterize concerns about upside risks to inflation across the committee, especially those tied to policies related to the Trump administration? Well, I’d say you see expectations moving up a little bit at the short end, but not at the long run, which is where it really matters. And those could be related to what you mentioned, some of the new policies.
I think where the committee is very much in the mode of waiting to see what policies are enacted. We don’t know what will happen with tariffs, with immigration, with fiscal policy, and with regulatory policy. We’re only just beginning to see, actually are not really beginning to see much.
And I think we need to let those policies be articulated before we can even begin to make a plausible assessment of what their implications for the economy will be. So, we’re going to be watching carefully. And as we always do, this is no different than any other set of policy changes at the beginning of an administration.
We’ll patiently watch and understand and not be in a hurry to get to a place of understanding what our policy response should be until we see how it plays out. Okay. Now, I’m going to show you this last video clip, and then I’m going to show you President Trump’s reaction.
So, his last question is about tariffs. So, Trump’s tariffs, how it’s going to affect monetary policy. So, you’re going to see, again, as expected, Powell gives a very vague answer.
So, I’m going to read these quotes. You’re going to see them, you know, look for these. So, Powell’s quotes are, there are so many possibilities.
There are so many variables. We just don’t know. We really don’t know.
We’ll just have to see how it goes. So, please take a look. What sort of information would you need to see on tariffs? Would you need to see a strategy, actual implementation, actual movement of inflation expectations before you’re actually willing to change the path of monetary policy on the basis of it? Yeah.
So, first of all, things are a little different. Now, we’ve just come through a high inflation period, and you can argue that both ways. You can say that companies have figured out that they do like to raise prices, but we also hear a lot from companies these days that consumers have really had it with price increases.
And so, I don’t know how that shakes out. Nonetheless, you’re coming through a situation where we’re not quite back to 2%, and that’s just different. In addition, you know, the kind of footprint of trade has changed a lot as trade is now spread around.
It’s not as concentrated in China as it was. There was a lot more manufacturing. It moved to Mexico and other places.
So, there are differences, and I just think the range of possibilities is very, very wide. We just don’t know, and I don’t want to start speculating as tempting as it is, because we really don’t know. And we didn’t know, by the way, in 2018.
We didn’t really know. And again, the range of possibilities is very, very wide. We don’t know what’s going to be tariffed.
We don’t know for how long or how much, what countries. We don’t know about retaliation. We don’t know how it’s going to transmit through the economy to consumers.
That really does remain to be seen. You know, there are lots of places where that price increase from the tariff can show up between the manufacturer and the consumer. Just so many variables.
So, we’re just going to have to wait and see. And, you know, the best we can do is what we’ve done, which is study up on this and look at historical experience, read the literature, and think about the factors that might matter. And then we’ll just have to see how it goes.
Now, after the Federal Reserve announced that they’re not going to cut interest rates today, President Trump responded immediately. And this is what he said. This is what he posted on Truth Social.
It says, Jay Powell and the Fed failed to stop the problem they created with inflation. And then it goes on to say that President Trump is going to take matters into his own hands and stop inflation and much more. So, it proceeds to say that this is going to be achieved by increasing energy outputs, slashing regulation, rebalancing international trade, and reigniting American manufacturing.
So, President Trump says that he’s going to make the United States of America powerful again. Okay, so we’ll see what happens. Please let me know what you think.
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Take care.