President Trump Demands Lower Interest Rates At World Economic Forum, But Federal Reserve Intends To Remain Resolute
“I’ll demand that interest rates drop immediately.”
Last week during the annual World Economic Forum meetings held in Davos, Switzerland, President Donald Trump via video made it known that he would work to force the Federal Reserve to dramatically lower interest rates, something Trump has consistently been a big proponent of.
In his address to the panel at the WEF, Trump stated:
With oil prices going down, I’ll demand that interest rates drop immediately. And, likewise, they should be dropping all over the world. Interest rates should follow us.
It is not immediately clear how the Federal Reserve will act this year, especially considering how vague and simply disingenuous the Fed has been these last few years especially. However, the Federal Reserve appears ready to stand firm in what they think should be done.
It is widely believed at the moment that the Fed will not cut interest rates later this week during their Federal Open Market Committee’s (FOMC) meeting, which would clash with Trump’s wishes to lower rates soon, the Associated Press noted.
Federal and public data, while many times scrupulous to say the least, currently implies that there will not be many rate cuts this year if not any at all, based on the immediate date provided thus far.
The AP added (excerpts):
While the two-day meeting that ends Wednesday may be uneventful, it nevertheless kicks off what is likely to be a turbulent year for the Fed. Trump, last Thursday, made clear he expects to comment on interest-rate policy and said, “I know interest rates much better than they do."
At the same time, Fed officials are also navigating a delicate period for the economy: They want to keep borrowing costs high enough to push inflation back to their 2% target, without keeping them too high for too long and plunging the economy into a recession.
[…] Until then, Trump's comments Thursday suggest he expects to regularly second-guess the Fed in public, despite a decades-long tradition among previous presidents of taking a hands-off approach to the central bank.
[…] Fed officials in December signaled that they expected to reduce rates just twice this year. But the 19-member committee that makes interest rate decisions is clearly divided.
[…] A big unknown for the Fed this year is whether Trump will impose tariffs, how sweeping they will be, and whether they will push up prices. Mass deportation of immigrants could also force employers to pay more for workers to fill jobs, which could also lift inflation.
Most economists forecast that widepread tariffs will likely lift inflation by roughly several-tenths of a percentage point — not a large amount, but potentially enough for the Fed to postpone rate cuts. It could take months for the tariffs to be formally imposed and then to evaluate their impact on the economy. Some economists don't think the impact will be apparent until next year.
President Trump is a big fan of low interest rates and is something he regularly advocated for during his first presidency, even including calls for negative rates when bickering with Powell on fiscal policy.
The WinePress cited Trump’s thoughts on the matter in an article in May of last year, where Trump more than once called for a weaker dollar.
From that report:
In a post on Truth Social on April 23rd, Trump wrote:
The Dollar has just hit a 34 year high against the Yen, a total disaster for the United States. When I was President, I spent a good deal of time telling Japan and China, in particular, you can’t do that. It sounds good to stupid people, but it is a disaster for our manufacturers and others.
They are actually unable to compete and will be forced to either lose lots of business, or build plants, or whatever, in the “smart” Countries. This is what made Japan and China into behemoths years ago. I put limits on both (and others!), and if they violated those limits, there was hell to pay. Biden has let it go. Watch them now pick apart the U.S. It will be an open field day. Don’t let this happen Crooked Joe. Wake up and smell the roses!
Forbes noted in a report, ‘Trump is exploring options to devalue the dollar if he returns to office in November in order to address the U.S. trade deficit with countries like China and Japan, Politico reported—a move widely criticized by experts who say this could also contribute to inflation and raise prices for American consumers.’
Additionally, Trump’s advisers have also hinted at penalties for nations that move away from the dollar.
Bloomberg noted that these ‘discussions include penalties for allies or adversaries who seek active ways to engage in bilateral trade in currencies other than the dollar — with options including export controls, currency manipulation charges and tariffs, the people said, speaking on the condition of anonymity.’
Trump and his advisers have insinuated that, should he be reelected, he will move to stop BRICS and others from de-dollarizing. Trump said in a March 11th interview on CNBC:
I hate when countries go off the dollar. I would not allow countries to go off the dollar because when we lose that standard, that will be like losing a revolutionary war. That will be a hit to our country.
With Biden, you’re going to lose the dollar as the standard. That’ll be like losing the biggest war we’ve ever lost.
Trump has indicated a number of other times during his presidency that he hates a strong American dollar.
In April, 2017, USA Today reported: ‘In an interview with The Wall Street Journal, the president made headlines and moved currency and bond markets when he said the strength of the U.S. dollar was hurting the competitiveness of U.S. companies that do a lot of business abroad. Trump also admitted he’s a fan of lower interest rates, saying, “I do like a low-interest rate policy, I must be honest with you.”‘
I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me.
It’s very, very hard to compete when you have a strong dollar and other countries are devaluing their currency.
He also noted in that interview, speaking of then Federal Reserve Chair Janet Yellen, now Treasury Secretary under Biden, said “I like her, I respect her.”
Trump echoed similar sentiments in 2019, saying that he is not joyous that the dollar is strong. He said in a tweet:
As your President, one would think that I would be thrilled with our very strong dollar. I am not! The Fed’s high interest rate level, in comparison to other countries, is keeping the dollar high, making it more difficult for our great manufacturers like Caterpillar, Boeing, John Deere, our car companies, & others, to compete on a level playing field.
With substantial Fed Cuts (there is no inflation) and no quantitative tightening, the dollar will make it possible for our companies to win against any competition.
We have the greatest companies, in the world, there is nobody even close, but unfortunately the same cannot be said about our Federal Reserve. They have called it wrong at every step of the way, and we are still winning. Can you imagine what would happen if they actually called it right?
President Trump has also advocated for negative interest rates. Essentially, negative interest rate policies would push customers to pay banks to hold their savings and reserves, and gift interest to those who hold onto debt, such as personal loans or mortgages.
In September 2019, Reuters reported: ‘U.S. President Donald Trump’s push for low interest rates reached a new pitch on Wednesday, when he demanded the Federal Reserve take the extraordinary step of sending them below zero.’ Trump said in a tweet:
The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term. We have the great currency, power, and balance sheet… The USA should always be paying the … lowest rate. No Inflation!
It is only the naïveté of (Fed Chairman) Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing. A once in a lifetime opportunity that we are missing because of ‘Boneheads.’
On November 12th, 2019, Trump said during a speech to the Economic Club of New York:
Remember we are actively competing with nations that openly cut interest rates so that many are now actually getting paid when they pay off their loan, known as negative interest. Who ever heard of such a thing? Give me some of that. Give me some of that money. I want some of that money. Our Federal Reserve doesn’t let us do it.
AUTHOR COMMENTARY
It should also be noted that Trump has said that he believes the President (himself) should have a seat at the table at the FOMC, to be able to vote on interest rate policies.
Last I checked, I thought the mission was “Make America Great Again?” So, how does that then gel with calls for a weaker currency and negative interest rates - where you and I would have to pay financial institutions to hold our money, rather than earning interest accrued over time? Simply put, this benefits the bigs, the corporate powers, private interests, and the Federal Reserve. Don’t fall for the dog & pony show. A weaker dollar is not good for the people, you and I, but a devalued currency goes great for the corporate agenda as it requires more debt units to buy their products and services while driving their stock values higher.
Simply put, a weaker dollar and low rates is INFLATIONARY. And you consider that he wants to cut the corporate tax rate even more from the last time, from 21 to 15%, this is purely designed to benefit those special interests and the military industrial complex. Trump even said as much when he spoke to the Davos crowd, saying, “My message to every business in the world is very simple: come make your products in America and we will give you among the lowest taxes of any nation on Earth. But if you don't make your product in America, which is your prerogative, then very simply you will have to pay a tariff.”
Proverbs 22:16 He that oppresseth the poor to increase his riches, and he that giveth to the rich, shall surely come to want.
I mention Trump’s recent calls to lower interest rates because I ultimately think that is going to happen on the long term, by hook or by crook. We’ll see how it plays out, but we understand that the data we get is fake and not to be taken all too seriously anyways;
But assuming the Fed does not cut this week, it will create the perfect soap opera drama for Trump to go calling Powell a “bonehead” again, and shout from the rooftops why we need lower rates, and get his MAGA base to cheer for lower rates (having no idea what they’re supporting and why, other than because Trump said it), and eventually will result in lower rates; not because of “Trump’s tough negotiations,” but because the ultimate goal by the Federal Reserve and central banks is to inflate: this brings the world closer to the new system of tokenized assets and CBDCs.
BlackRock has said as much outright in 2019, where they explicitly called for helicopter money and inflation to justify the transition into digital assets.
Proverbs 11:18 The wicked worketh a deceitful work: but to him that soweth righteousness shall be a sure reward.
[7] Who goeth a warfare any time at his own charges? who planteth a vineyard, and eateth not of the fruit thereof? or who feedeth a flock, and eateth not of the milk of the flock? [8] Say I these things as a man? or saith not the law the same also? [9] For it is written in the law of Moses, Thou shalt not muzzle the mouth of the ox that treadeth out the corn. Doth God take care for oxen? [10] Or saith he it altogether for our sakes? For our sakes, no doubt, this is written: that he that ploweth should plow in hope; and that he that thresheth in hope should be partaker of his hope. (1 Corinthians 9:7-10).
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