After a better-than-expected jobs report, the US President immediately urged the Fed to cut interest rates because prices are falling.
On May 3, US President Donald Trump wrote on the social network Truth Social that the US economy is only in a transitional phase. He affirmed that the country does not have inflation, citing the fact that gasoline prices are currently at their lowest level in many years, food prices (including eggs) have decreased, and mortgage interest rates have also decreased, in the context of a strong job market and the US collecting billions of dollars more from import taxes.
Consumers have waited many years to see prices go down. There is no inflation. The Fed should cut interest rates," he wrote.
The move came after the US Department of Labor released a better-than-expected April jobs report on May 2. Accordingly, the country created 177,000 new jobs, higher than the 133,000 forecast by analysts.
Mr. Trump's status shows that the US President still wants to influence the Fed's decision-making process. In the past few months, he has continuously urged the agency to lower interest rates. Most recently, on April 21, Mr. Trump called Fed Chairman Jerome Powell a "big loser" and warned that the US economy would slow down if interest rates were not reduced "immediately".
Analysts say Mr. Trump wants to lower interest rates to minimize the impact of slowing economic growth. His import tax policies are expected to increase commodity prices and slow global trade. However, Powell does not want to lower interest rates early, due to concerns about inflation. The Fed is still carefully monitoring economic data to assess the impact of Mr. Trump's unprecedented policies.
The US economy has also received a lot of negative news recently. GDP in the first quarter decreased by 0.3%. Meanwhile, manufacturing activity in April fell to a five-month low.
Last month, White House economic adviser Kevin Hassett said the Trump administration was considering legal measures to fire Powell. This raised concerns in markets that the Fed would no longer be able to operate independently. The US stock market, the US dollar, and US government bond prices all fell. On April 22, the situation cooled down when Trump affirmed that he had no intention of firing Powell.
However, the US President is still not satisfied with Powell. "A Fed official is not really doing a good job," Trump said at an event in Michigan on April 30, but did not directly name Powell.
"I want to be polite and respectful to the Fed. People still say you should not criticize the Fed; you have to let it do its job. But believe me, I know more about interest rates than he does," he added.
(according to Reuters, CNBC)