Trump Threatens Trade Halt Unless Fed Eases Monetary Policy
US President Donald Trump has threatened to halt trade with certain countries unless the Federal Reserve lowers its base rate. In a post on his Truth Social platform, Trump wrote that he would stop trading with countries that have a deficit if the Fed fails to ease its monetary policy.
The labour market in the US has been growing strongly, and Trump argued that this is sufficient justification for lower interest rates. However, economists point out that a strong labour market can fuel wage growth, which in turn increases the risk of inflation.
Trump failed to mention that inflation in his country has been above the Fed's 2% target for more than five years. Additionally, he left unclear what connection he sees between the desired interest rate cut and the trade deficit with certain countries.