Donald Trump Pushes for 100 BPS Rate Cut Ahead of FOMC Meeting

Trump's bold rate cut demand shakes up Fed expectations.

POLITICAL PRESSURE MOUNTS

The former president just threw a monetary policy grenade into the financial markets—advocating for a full percentage point reduction before the Federal Open Market Committee convenes.

MARKETS ON EDGE

Traders are recalibrating positions as Trump's unexpected intervention adds volatility to pre-meeting speculation. The suggested 100 basis point cut would represent the most aggressive easing move in decades.

FED INDEPENDENCE TESTED

This isn't the first time Trump has publicly pressured the central bank, but the timing—right before a critical meeting—creates unprecedented tension between political demands and monetary policy independence.

Because nothing says 'stable monetary policy' like presidential tweets dictating interest rate moves—as if the Fed needed more help looking politically compromised.

TLDR

• Trump suggests a 100 bps rate cut, citing expert Greg Faranello.
• Markets see a 91% chance of a 25 bps rate cut this September.
• August U.S. jobs data shows only 22,000 jobs added, missing forecasts.
• Fed Governor Waller supports multiple rate cuts over the next six months.

Former U.S. President Donald TRUMP has once again called on the Federal Reserve to cut interest rates, this time suggesting a rate cut of up to 100 basis points. The comment comes just days before the Federal Open Market Committee (FOMC) is set to meet, with most market watchers expecting a smaller 25 basis point cut. Trump’s remarks have drawn attention to growing pressure on the Fed to act more aggressively.

Trump Cites Experts, Questions Fed’s Current Approach

In a recent post on Truth Social, Donald Trump referred to comments made by Greg Faranello, head of U.S. rates strategy at AmeriVet Securities. Faranello mentioned that the Fed might cut interest rates by “50, 75, or maybe 100” basis points in the coming months. Trump echoed this view, stating that the Federal Reserve should have acted sooner.

Trump also referenced investment manager Jay Hatfield, who criticized the Fed’s 2% inflation target. According to Hatfield, this target is outdated and too rigid for the current economic environment. He added that the Federal Reserve relies on old economic data and has failed to adjust to modern financial conditions.

Trump repeated his long-standing criticism of Fed Chair Jerome Powell. He said that Powell had acted too late and has made policy decisions based on weak economic indicators. Trump added that the Fed’s late action had already affected the labor market and general economic growth.

Market Pricing in Smaller Cut Despite Pressure

According to the CME FedWatch Tool, markets currently see a 91% chance that the Fed will cut interest rates by 25 basis points at the upcoming meeting. The probability of a 50 basis point cut stands at 9%. Market analysts say that this may change depending on incoming data, particularly the Consumer Price Index (CPI) and Producer Price Index (PPI) figures expected later this week.

Despite Trump’s push for a deeper cut, most investors believe the Fed will remain cautious. Fed Governor Chris Waller has recently suggested that the committee could make multiple rate cuts over the next three to six months. He said he was not concerned about inflation and expected it to stay stable, even with continued trade pressure.

Waller also added that the labor market shows signs of slowing. He stated that the committee must consider these changes when deciding on interest rate moves in the NEAR term. The recent drop in job creation has added weight to the argument for rate cuts.

Weak Jobs Data Adds to Rate Cut Expectations

August’s U.S. jobs report came in much lower than expected. The economy added only 22,000 jobs, compared to forecasts of 75,000. This marks one of the weakest months for job growth in over two years. The unemployment rate also ROSE to 4.3%, reaching its highest point in nearly four years.

These labor market indicators have led to growing calls for the Fed to adjust its current policy stance. Trump pointed to this data in his criticism of Powell and the Federal Reserve’s timing. He said the central bank had waited too long to support the economy and should have begun cutting rates months ago.

The FOMC is set to meet next week, and while a 25 basis point cut remains the expected move, Trump’s comments have sparked fresh debate. The possibility of a deeper cut will likely depend on the inflation data due before the meeting.