President Trump and Vice President Vance are joining forces to pressure the Federal Reserve to lower interest rates. On Wednesday morning, Vance posted on his X platform account, echoing his boss Trump’s call for the Federal Reserve to ease monetary policy. The latest inflation data indicated that the tariff policy has not yet exerted substantial upward pressure on prices.
“The president has emphasized this matter for a long time, but the current situation is becoming increasingly clear: The Fed’s refusal to cut interest rates is a dereliction of duty in monetary policy,” Vance wrote.
This statement followed the release of a report from the US Bureau of Labor Statistics, which showed that the overall CPI and the core CPI excluding food and energy both rose by only 0.1% month-on-month, with year-on-year increases of 2.4% and 2.8%, respectively, both higher than the Federal Reserve’s 2% target level.
Although Trump himself did not comment on the CPI data on Wednesday, he continued to pressure Federal Reserve Chair Powell and his colleagues on the Federal Open Market Committee to demand interest rate cuts. The last time the Federal Reserve cut interest rates was back in December last year. Recently, many officials have expressed concerns about the long-term inflationary impact of the tariff policy. Trump once publicly demanded a significant reduction of the federal funds rate target by a full percentage point from the current level of 4.25%-4.5%.
The Federal Open Market Committee will announce its interest rate decision in a week. The market expects that the probability of a rate cut at this two-day meeting is zero. According to data from the Chicago Mercantile Exchange, traders are generally betting that the Federal Reserve will launch easing in September.
US government officials emphasized that the easing of inflation data and the cooling of the labor market constitute the grounds for interest rate cuts.
Elyse Ausenbaugh, head of investment strategy at JPMorgan Asset Management, said, “In my opinion, the combination of these factors means that the time for a new round of interest rate cuts may be ripe.” However, it is expected that the Federal Reserve will still emphasize the persistent uncertainties and adopt a cautious stance of avoiding premature action. This is indeed a dilemma.
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