Trump: Believes Powell is Ready to Cut Interest Rates

On Friday local time, U.S. President Donald Trump stated that he believes the Federal Reserve will soon initiate interest rate cuts, a goal he has been pushing for months. A day earlier, Trump met with Fed Chair Jerome Powell at the Federal Reserve headquarters.

Trump claimed that he had a pleasant meeting with Powell on Thursday and believes the Fed is now prepared to deliver the accommodative monetary policy he has long sought.

"I think we had a very good meeting on interest rates. Powell was very firm in telling me, 'The country is doing well,' and I took that to mean he will start recommending rate cuts."

However, Powell and most Fed policymakers have remained cautious about cutting rates, concerned about the lagging effects of the Trump administration's tariffs on inflation. In fact, Powell has repeatedly argued for patience until economic data becomes clearer, citing a "strong enough economy to withstand higher rates."

Before Trump's remarks, White House Office of Management and Budget Director Russell Vought continued to pressure the Fed, calling for a comprehensive review of the central bank's operations and urging rate cuts to boost the housing market.

Vought said, "There are a number of questions surrounding the Fed that need to be answered, and we hope to get clarity over time. This is not pressure on the Fed chair but a policy concern."

Thursday’s meeting was seen as an opportunity to ease tensions between the two sides. The Fed issued a statement on Friday, saying it was honored to host the president and Republican lawmakers and thanking Trump for his support of the Fed headquarters renovation project.

A Fed spokesperson said, "We appreciate the president’s encouragement to complete this important project, and as we do so, we remain committed to managing these resources prudently."

Beyond interest rates, the White House has also targeted the Fed’s financial losses. Due to prolonged high interest rates, in 2024, the Fed’s interest payments on bank reserves exceeded its portfolio income, resulting in nearly $80 billion in annual losses.

Vought asserted that the White House would continue to express concerns about the Fed’s management. "In the U.S. political system, no one is immune from questioning—not even the Fed."

On Thursday, Trump downplayed his earlier threats to fire Powell, saying he believes Powell will "do the right thing." Futures markets currently expect almost no chance of a rate cut at next week’s Fed meeting, with the first cut likely in September and possibly another before year-end.