Trump Threatens Trade Halt Over Fed Interest Rate

US President Donald Trump has threatened to halt trade with countries that have a deficit against the US unless the Federal Reserve lowers its base interest rate. In a post on his Truth Social platform, Trump wrote: 'LOWER THE RATE OR I'LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT.'

This comes after a strong labour market report for August was released by the US Department of Labor, showing an increase of 162,000 new jobs, exceeding economists' forecasts of just 55,000. The Fed's priority is price stability, and with inflation above its 2% target for over five years, some may see Trump's demand as unrealistic.

Economists point out that a strong labour market can fuel wage growth, which in turn increases the risk of inflation. This contradicts Trump's argument that the labour market growth justifies lower interest rates. It remains unclear what connection Trump sees between the desired interest rate cut and trade deficits with certain countries.