Trump Threatens to Cut Off Trade Unless Fed Lowers Rates
President Donald Trump has threatened to stop trading with countries that run a trade deficit with the US unless the Federal Reserve lowers interest rates.
The threat comes after a surprisingly strong jobs report showed that US employers hired 162,000 new workers in August, more than double what economists had anticipated. This news opens the door for the Fed to hike interest rates to combat inflation concerns, with rate hike odds jumping to 60% from 49%.
The trade deficit is a significant issue for the US, with over $200 billion of imports exceeding exports in China last year alone. The overall trade deficit was $1.2 trillion, according to federal data. Trump's comments on Truth Social also mentioned that lowering interest rates would be 'better than tariffs', which he has used as a tool to pressure other countries.
Fed officials have sent mixed signals ahead of their policy meeting next week, with some members willing to raise rates if inflation remains high and others more cautious. The Consumer Price Index report for August will be closely watched, as the nation's annual inflation rate jumped by a full percentage point to 3.4% in July.