Trump and the pressing rate cut

[M47AK16]

The funny thing about Trump is that, he insists on his ideas for so long that, sometimes they do become right eventually.

Because if the rates were cut exactly when Trump wanted it to be cut, then it would have been not that great for the country, and yet, slowly, FED declined to cut the rates for so long that, now it's basically a must do thing, so right now Trump is right. He had some ideas like that, where if it was done the moment he wanted it, it would be horrible, but wait a few years and he becomes right eventually.

Not because he knows anything or can see the future or anything, because if you do EVERYTHING trump asks the moment he asks it? The nation would crash in a month. You just have to ask him what he thinks, wait 2 years, and then do whatever is good, and ignore whatever is bad.

[bangjoe]

There is no reason why the FED should cut rates.
They have a dual mandate: job and inflation.
We are on the right track on the job side, and the US is at nearly full employment.
On the inflation side, data is getting hotter and hotter, and the tariff situation will add some pressure to the scenario.
I don’t understand why JP could raise rates.
The only reason the FED could cut rates is the political pressure from the White House. Powell's problem is that he has to have the Board of Governors on his side, but sadly, they are concerned about re-election.

We have witnessed Trump repeatedly pressuring Powell to lower interest rates, especially in the last two months, even resorting to intimidation and threats of dismissal.

Powell's speech a few days ago indicated the possibility of an interest rate cut, but it still left an uncertain impression.

September appears to be a crucial month, especially for major shifts across all markets. Key data points to watch include the JOLTS report on September 3, the unemployment rate and NFP data on September 5, the PPI data on September 10, the CPI data on September 11, and the September 18 decision on whether to cut the 4.50% interest rate. If the data released throughout September points toward a positive outlook for an interest rate cut, the most likely reduction would be 50 basis points, with 25 basis points being the primary focus.

I really hope for cutting interest rates because with that the entire market will receive fresh air.

[Wind_FURY]

If he assumes full power without institutional restraint, America could truly transform into a Fourth Reich: a great, ultra-nationalist, exclusive, and authoritarian power in the 21st century.

This rhetoric appeals to a conservative white voter base that feels threatened by globalization and the multicultural demographics of the US.

I don't think it is possible in the US because the two bold parts are in contradiction.

US is not a "natural" country, it is a colony and the ~350 million population are not Americans, they are immigrants who call themselves American. This is why they usually identify as Something-American like Irish-American, African-American, and so on. Something that is not true in a real country like Germany. Which is why "nationalism" has a different meaning too and could lead to "Reich" in Germany but not in the US.

I believe that after centuries and a war that liberated themselves from the rule of the English, they should be considered THE people of that land, no?

It's the same with Australian and that continent.

Of course they have tried to artificially create the concept of "nationalism" in this colony by doing things like mass advertisement of benefits of "genetic/racial mixing" to strip the colonizers/immigrants of their ancestral identity and replace it with a new artificial one but their success rate is still small (30% IIRC) and the result is indifferent people who are more like potatoes rather than nationalists!

The main thing that used to unite all these completely different people under the same flag was the promise of "land of opportunity" something that was always a lie and is now long dead which is clear from Trump's main campaign ad/fake promise that won him the election: M.A.G.A.!

I don't know what sort of "nationalism" debate you're trying to start, but a country with people who actually fought and help liberate countries in Europe from the rule of the "Third Reich" should have some sort of "national identity" inside them.

Back to the topic of Trump and the pressing rate cut, and because the Federal Reserve is usually late in cutting rates, do believe that Trump is right to keep forcing Powell to cut the rates as soon as possible?

[fillippone]

The funny thing about Trump is that, he insists on his ideas for so long that, sometimes they do become right eventually.

Because if the rates were cut exactly when Trump wanted it to be cut, then it would have been not that great for the country, and yet, slowly, FED declined to cut the rates for so long that, now it's basically a must do thing, so right now Trump is right. He had some ideas like that, where if it was done the moment he wanted it, it would be horrible, but wait a few years and he becomes right eventually.

Not because he knows anything or can see the future or anything, because if you do EVERYTHING trump asks the moment he asks it? The nation would crash in a month. You just have to ask him what he thinks, wait 2 years, and then do whatever is good, and ignore whatever is bad.

I think that at the moment there are no valid reason to cut rates.
And on Friday, when JPow spoke at Jackson Hole, the market reacted abruptly as the move wasn’t priced in. The erratic behaviour of Trump mad the market backpedal a little, this meaning it is all fabricated.

[abhiseshakana]

If he assumes full power without institutional restraint, America could truly transform into a Fourth Reich: a great, ultra-nationalist, exclusive, and authoritarian power in the 21st century.

This rhetoric appeals to a conservative white voter base that feels threatened by globalization and the multicultural demographics of the US.

I don't think it is possible in the US because the two bold parts are in contradiction.

US is not a "natural" country, it is a colony and the ~350 million population are not Americans, they are immigrants who call themselves American. This is why they usually identify as Something-American like Irish-American, African-American, and so on. Something that is not true in a real country like Germany. Which is why "nationalism" has a different meaning too and could lead to "Reich" in Germany but not in the US.

Of course they have tried to artificially create the concept of "nationalism" in this colony by doing things like mass advertisement of benefits of "genetic/racial mixing" to strip the colonizers/immigrants of their ancestral identity and replace it with a new artificial one but their success rate is still small (30% IIRC) and the result is indifferent people who are more like potatoes rather than nationalists!

The main thing that used to unite all these completely different people under the same flag was the promise of "land of opportunity" something that was always a lie and is now long dead which is clear from Trump's main campaign ad/fake promise that won him the election: M.A.G.A.!

Trump's ultranationalist policies are indeed fundamentally at odds with America's multicultural demographic reality. However, it is precisely this contradiction that fuels Trump's politics, exploiting the fears of the long-dominant (white) group of losing its hegemonic position. Ultimately, America has always been at a crossroads between closing itself off to exclusive nationalism or embracing pluralism as its global strength.

The history of the United States has not been smooth since its inception, but rather marked by a perpetual struggle between inclusivity and exclusivity. In the 19th century, large waves of immigration from Ireland and Germany gave rise to the Know-Nothing Party political movement, which rejected Catholics and poor immigrants. In 1882, the Chinese Exclusion Act was passed, explicitly banning Chinese immigration—one of the most blatant forms of racial discrimination in American legal history.

In the early 20th century, waves of immigrants from Southern and Eastern Europe were also perceived as a threat. The government implemented a strict quota system based on country of origin, demonstrating that "America's door" was not always open to all. However, a turning point came in 1965, when the Immigration and Nationality Act was enacted. This law abolished the racial quota system and opened the door to immigrants from Asia, Latin America, and Africa. From this, America developed into the multicultural nation we know today. In other words, the narrative of "America as a land of immigrants" is not a linear journey, but rather a cyclical push and pull between political nativism and the spirit of pluralism.

In the contemporary political landscape, Trump has emerged as a symbol of the rise of populist ultranationalism. Through the slogans "Make America Great Again" and "America First," he has echoed rhetoric emphasizing economic protectionism, immigration restrictions, and a rejection of globalism, which he considers detrimental to the American people, as exemplified by the Mexican border wall, the Muslim ban, and anti-China rhetoric. These policies stem from Trump's political base: the white lower-middle class living in rural and industrial areas. This group feels displaced by globalization, losing manufacturing jobs, and experiencing an identity crisis due to demographic change. Trump offers an exclusive nostalgia, a picture of an old America that was homogeneous, predominantly white, and centered on conservative Anglo-Saxon Protestant values. But here's the paradox: America's current social reality is moving in the opposite direction.

A fundamental contradiction is clearly visible here. Trumpism (which seeks to restore mono-ethnic dominance and nativist rhetoric) is actually colliding with the inevitable currents of history: America is a multicultural nation and will become even more so. The American Dream, the inclusive narrative that anyone, regardless of origin, can succeed through hard work, is a fundamental principle. Diversity is not just a social reality, but also a strategic resource that makes America competitive globally.

This contradiction is not just a matter of electoral politics, but also of national identity. If ultranationalism prevails, America will lose its global image as a nation of immigrants and a champion of liberal democracy. If multiculturalism prevails, America will retain its appeal as a magnet for global talent and innovation.

Looking ahead, political polarization between conservative nationalists and liberal multiculturalists will intensify, and the potential for social conflict will increase, particularly on issues of race, religion, and economic class. American democracy will be tested by internal divisions. When ultranationalism dominates, America's soft power weakens. The world no longer sees the US as a land of hope, but as a bastion of exclusivity. On the other hand, even as pluralism strengthens, America remains a center of innovation, education, and cultural power that captivates the world.

[EarnOnVictor]

However, Trump has far less ability to control the Federal Reserve than you might imagine. Fed officials cannot be arbitrarily dismissed by the President & the appointments require Senate confirmation, so he just cannot simply rearrange the board as he pleases. That being said, Kugler's abrupt resignation is a genuine plug and play move and Trump now gets to put in his own person who complements his ideas & thus perhaps shift the balance within the Federal toward either hawkish or dovish action. So yeah, he can absolutely put some pressure on the institution & place his allies there but he cannot control the whole institution on his fingertips and its independence is still there... at least until now.

I thought he didn't have the power to remove the FED Chair and the FOMC/Board member until Trump proves he does. It's all about taking it legally or by hook or by crook. Trump has always been known to be a shameless authoritarian pretending to be a democrat, and his antecedent precedes him. He is using nothing but blackmail.

Adriana Kugler's resignation would have been thought to be the end, but I guess Triump had a deeper motive. I believe the governors are being blackmailed to resign silently, and if any of them is too stubborn, such might be confronted, which was what I think happened to Lisa Cook recently on the mortgage fraud claim. He attempted the same on Jerome Powell too. Any of these governors who didn't have a clean record will surely be a victim, just for him to take over the FED.

If he assumes full power without institutional restraint, America could truly transform into a Fourth Reich: a great, ultra-nationalist, exclusive, and authoritarian power in the 21st century.

This rhetoric appeals to a conservative white voter base that feels threatened by globalization and the multicultural demographics of the US.

I don't think it is possible in the US because the two bold parts are in contradiction.
-snip-

I support this 100%!

[sana54210]

^Depends. I mean in that regard if FED chair could print 100 trillion tomorrow and you can't fire him? There are ways a FED chair could be taken down, but it is not just "because I want to", there are legal situations that make it possible and if it fits then yeah you can.

The problem however is that, congress is republican, senate is republican, and supreme court is republican, with a republican vice president and a republican president. It means, they can do whatever they want, and even if it's "because I said so" then they can, it is not going to be held up in court against them, they have the power now, supreme court could even make it possible. Hence, when you are that powerful, then it is not going to be that great for the nation. Although, I do really think rates should be cut.

[Fiatless]

I think that at the moment there are no valid reason to cut rates.
And on Friday, when JPow spoke at Jackson Hole, the market reacted abruptly as the move wasn’t priced in. The erratic behaviour of Trump mad the market backpedal a little, this meaning it is all fabricated.

The weakness in the US jobs market might be one of the reasons why rates might be cut in September. Jerome Powell sounded civil and dovish in his recent address in Jackson Hole, Wyoming. There was no emphasis on the negative effects of Trump’s tariffs. It seems political pressure has started to influence the Fed's decisions. I expect at least a 25 basis point cut this September.

[fillippone]

I think that at the moment there are no valid reason to cut rates.
And on Friday, when JPow spoke at Jackson Hole, the market reacted abruptly as the move wasn’t priced in. The erratic behaviour of Trump mad the market backpedal a little, this meaning it is all fabricated.

The weakness in the US jobs market might be one of the reasons why rates might be cut in September. Jerome Powell sounded civil and dovish in his recent address in Jackson Hole, Wyoming. There was no emphasis on the negative effects of Trump’s tariffs. It seems political pressure has started to influence the Fed's decisions. I expect at least a 25 basis point cut this September.

Weakness by what measure?
Unemployment is at full potential and I know many European leaders who would get one limb chopped off to have a weak labour market like yours.
Surely 25 bps are on the cards for September, I think market prices 80% probability for that.

[Fiatless]

Weakness by what measure?
Unemployment is at full potential and I know many European leaders who would get one limb chopped off to have a weak labour market like yours.
Surely 25 bps are on the cards for September, I think market prices 80% probability for that.

Although it's a slight weakness, it is also significant. Nonfarm payrolls for July rose by only 73,000, below the market estimate of 110,000. The July job reports also came with the revision of May and June reports, which showed that only 19,000 jobs were added in these months, but 291,000 jobs were reported. The unemployment rate moved from 4.1% to 4.2% in July.

Based on this information the probability of the Feds cutting interest rates moved from 40% to 80%.

https://www.nbcnews.com/business/economy/us-jobs-report-july-downward-revisions-worse-than-thought-rcna222442

[Wind_FURY]

The funny thing about Trump is that, he insists on his ideas for so long that, sometimes they do become right eventually.

Because if the rates were cut exactly when Trump wanted it to be cut, then it would have been not that great for the country, and yet, slowly, FED declined to cut the rates for so long that, now it's basically a must do thing, so right now Trump is right. He had some ideas like that, where if it was done the moment he wanted it, it would be horrible, but wait a few years and he becomes right eventually.

Not because he knows anything or can see the future or anything, because if you do EVERYTHING trump asks the moment he asks it? The nation would crash in a month. You just have to ask him what he thinks, wait 2 years, and then do whatever is good, and ignore whatever is bad.

I think that at the moment there are no valid reason to cut rates.
And on Friday, when JPow spoke at Jackson Hole, the market reacted abruptly as the move wasn’t priced in. The erratic behaviour of Trump mad the market backpedal a little, this meaning it is all fabricated.

May I interject in your conversation and ask why do you believe that the Federal Reserve has currently NO reason to cute rates? Is it because Inflation isn't stable under 2% yet?

There's a narrative going on that says 2% is an arbitrary number, and that it doesn't actually matter if Jerome Powell cuts now.

Plus because the Federal Reserve is usually late in cutting rates because of lagging data, doesn't that mean Trump might be right to force Powell to cut rates "NOW"? The unemployment rate could surge anytime in my opinion.

[pooya87]

That's right, nationalism can't exist in the USA because it's a country of European migrants.

Nationalism exists in the US but it is not the same concept as you and I know. The immigrants are also from everywhere not just from Europe.

I hear from many local people, who are in the USA that it's really a land of opportunity. Why do you think that it's a lie?

Because of many reasons but the shortest thing I can tell you is that 99% of the population is going through hardship, many of them living hand to mouth and are up to their necks in debt while 1% of the population holds all the money. In other words the "opportunity" belonged to a very small minority.

I believe that after centuries and a war that liberated themselves from the rule of the English, they should be considered THE people of that land, no?

The land didn't belong to the English for them to liberate it from. The land belonged to the Americans (which they now call "Indians" or "natives") and they took it from these so called natives by force and committed genocide by ethnically cleansing the indigenous population (murdered millions of them). That makes them the colonizers of someone else's lands.

Back to the topic of Trump and the pressing rate cut, and because the Federal Reserve is usually late in cutting rates, do believe that Trump is right to keep forcing Powell to cut the rates as soon as possible?

It's not that simple, as I said initially this looks to me more like a political fight and also it depends on a lot of factors, so the answer to your question is not a simple yes or no.

Lowering energy prices using Arab dictators and attracting investors, improving domestic production, and stuff like that would be arguments that could be made in favor of cutting rates. But a lot of other arguments can be made against it.

There is also the ginormous national debt and the increasing budget deficit of the US government. Something Trump claims to be covering with the tariffs he is taking but without increasing taxes it only covers a small part of it not all as he claims. That deficit means guaranteed inflation, something cutting rates could maximize.

Then there is the economic war Trump is waging against the world (one part of it is the tariffs) while the world is dumping the dollar.
Meanwhile during dedollarisation, if they cut rates the world would hasten its dedollarisation and will also more importantly dump the bonds (the US debt these countries are bag-holding). Also since the deficit I mentioned above is covered by creating debt and selling it, if there are less countries buying that debt, they can't cover that deficit; remember countries like China have already dumped hundreds of billions of dollars of their bonds, with lower interest rates they'll have even more incentive to liquidate more of what they are left with.

[fillippone]

May I interject in your conversation and ask why do you believe that the Federal Reserve has currently NO reason to cute rates? Is it because Inflation isn't stable under 2% yet?

There's a narrative going on that says 2% is an arbitrary number, and that it doesn't actually matter if Jerome Powell cuts now.

Plus because the Federal Reserve is usually late in cutting rates because of lagging data, doesn't that mean Trump might be right to force Powell to cut rates "NOW"? The unemployment rate could surge anytime in my opinion.

FED has a dual mandate: inflation AND Jobs.
Job situation is on the strong side, with unemployment close to historical law, even if labour force participation is on the secular downtrend.
Inflation is instead running hot, with tariffs still not impacting headline numbers, with probably huge impact on the coming months.
Not the right moment to cut rates.

[₿itcoin]

I thought he didn't have the power to remove the FED Chair and the FOMC/Board member until Trump proves he does. It's all about taking it legally or by hook or by crook. Trump has always been known to be a shameless authoritarian pretending to be a democrat, and his antecedent precedes him. He is using nothing but blackmail.

Adriana Kugler's resignation would have been thought to be the end, but I guess Triump had a deeper motive. I believe the governors are being blackmailed to resign silently, and if any of them is too stubborn, such might be confronted, which was what I think happened to Lisa Cook recently on the mortgage fraud claim. He attempted the same on Jerome Powell too. Any of these governors who didn't have a clean record will surely be a victim, just for him to take over the FED.

You are right, unless there is a valid reason such as wrongdoing, Trump cannot simply fire Fed Chair Powell or any other Board governor.  They are protected by the law & judges are prepared to enforce that.  In the event that Trump attempts to remove Powell, the courts are preparing for a confrontation.

Nah, there is no evidence that governors are being forced to resign through blackmail.  With effect from Aug 8, Adriana Kugler resigned voluntarily, the majority of the coverage attributes this to professional reasons rather than coercion.

you know, Sen Kennedy & legal experts have openly defended Fed independence, confirming that Trump lacks legal support for firing Powell.

Political pressure is increasing, though as Trump seeks to appoint regional leaders & fill vacancies on the Board with his preferred candidates in order to sway Fed policy.  That is risky however it is not the same as firing employees.

yeah,, Trumps strategy is aggressive & destabilising however the Fed has not given up power.  Investor trust still depends on independence.

[shield132]

That's right, nationalism can't exist in the USA because it's a country of European migrants.

Nationalism exists in the US but it is not the same concept as you and I know. The immigrants are also from everywhere not just from Europe.

It's a pity but I don't have personal experience, I mostly hear things from my friends and relatives who live abroad because I know them at some degree, we grew up in the same environment, I know their mindset, and their experience feels more close to my potential experience. I've heard from them that in the USA, after spending a few years, you do not feel like a foreigner, people in the USA make you feel like an American when you spend a few year with them.

I hear from many local people, who are in the USA that it's really a land of opportunity. Why do you think that it's a lie?

Because of many reasons but the shortest thing I can tell you is that 99% of the population is going through hardship, many of them living hand to mouth and are up to their necks in debt while 1% of the population holds all the money. In other words the "opportunity" belonged to a very small minority.

That's the most interesting part. By the way, in my country working class is very hardworking. Me for example, I work 12 hours a day because I want to live a normal life, I have a job and then I do freelance to pay a rent, to eat healthy, to go to the gym. I sometimes wonder, how good will my life be with my work ethic in the USA? Life is terrible and interesting at the same time. Sometimes I want to give up because working 12 hours every day for years to earn $1500 a month in my country, where the average salary is $500, kills me mentally, I'm tired.

[fillippone]

yeah,, Trumps strategy is aggressive & destabilising however the Fed has not given up power.  Investor trust still depends on independence.

Hopefully, but I am losing faith: why Powell, who is going to retire soon anyway, chose to open for a rate cut in September? I could understand the members of the board, who need to be re-elected, but JPOW? He could have signaled a total independence of the FED from the WHite House, which is by far more important, in the long run, than a mere 25 bps cut.

[coyhasmon]

yeah,, Trumps strategy is aggressive & destabilising however the Fed has not given up power.  Investor trust still depends on independence.

Hopefully, but I am losing faith: why Powell, who is going to retire soon anyway, chose to open for a rate cut in September? I could understand the members of the board, who need to be re-elected, but JPOW?

There is nothing wrong with doing a rate cut. You keep repeating that it is bad without any substance. The world is not going to be destroyed because of a small rate cut.

He could have signaled a total independence of the FED from the WHite House, which is by far more important, in the long run, than a mere 25 bps cut.

There is no independence, it is just a theater for people who are naive.

[fillippone]

He could have signaled a total independence of the FED from the WHite House, which is by far more important, in the long run, than a mere 25 bps cut.

There is no independence, it is just a theater for people who are naive.

To me, this is the point.
A 25 cut is a policy error, in my humble opinion, but this cut or even a 50 bps one, aren’t going to change anything in the big scheme of events.
Yet, if those cut are done to accommodate Trump pressure, this is far worse.
I don’t think I am a naive person, but this level of pressure from fiscal authorities on the FED is unprecedented, even by modern standards.

[coyhasmon]

To me, this is the point.
A 25 cut is a policy error, in my humble opinion, but this cut or even a 50 bps one, aren’t going to change anything in the big scheme of events.

I am trying to say is a bit different. Even if it is an error, it is not going to destroy the economy. Do the cut, observe what happens and let's see if it is a mistake or not.

Yet, if those cut are done to accommodate Trump pressure, this is far worse.
I don’t think I am a naive person, but this level of pressure from fiscal authorities on the FED is unprecedented, even by modern standards.

A lot of the public fighting is just theater. Don't always assume these things are real, especially from a country that is so obsessed about making everything into entertainment. It is difficult to be sure about these things, but the default stance should be that it is fake. A lot of these things are used to distract the population through the media from other things that are going on. Look at it wider. Tariffs on and off, Trump and Musk fighting on and off, in between and more recently Powell and Trump fighting on and off, Epstein again and such it goes. There is always a distraction, never a time without one..

And if you look at the recent yes saying to rate cut, there are only two options. Either doing a cut was already alright but Powell refused for political reasons or theater, or a cut is mistake now but he's accepting to do it for a political reason. Because since the last FED meeting and the next rate cut meeting, nothing really changed. It just shows that there is no independence, the whole system is deeply corrupt. You can even dismiss most of the economic data as at least partially false, sometimes even significantly falsified.

[fillippone]

To me, this is the point.
A 25 cut is a policy error, in my humble opinion, but this cut or even a 50 bps one, aren’t going to change anything in the big scheme of events.

I am trying to say is a bit different. Even if it is an error, it is not going to destroy the economy. Do the cut, observe what happens and let's see if it is a mistake or not.

The fed has a dual mandate. Job market is at historical high. Unemployment is at a level consistent with full employment. Wage are growing, slower, but growing.
Inflation is still above target, with a potential effect from tariffs that has still to materialise, given the most increase comes from services and housing markets.
The risk is to cut to soon, and when tariffs come into play, being forced to raise rates too violently.