Trump's Interest Rate Demands Spark Fears of Global Financial Crisis
President Donald Trump has repeatedly called for the US Federal Reserve to lower interest rates to 1% from their current range of 3.75% to 4%. However, analysts warn that such a drastic cut would have catastrophic consequences for the global financial system.
J. Benson Durham, founder of DASM investment research firm, described a 3-percentage-point cut as 'cataclysmic'. He said that treasury rates would climb as investors priced in higher inflation, and countries like Germany could attract capital by offering slightly higher interest rates than the US.
Trump's demands for ultra-low borrowing costs have been met with skepticism by some of his allies. Grover Norquist, head of Americans for Tax Reform, said that Trump should be clear that the Fed's rate hike was not a personal attack on him, but rather an effort to control inflation ahead of the midterm elections.
The White House did not comment on Trump's remarks, but some analysts believe that the president is using the Fed as a scapegoat for his own economic woes. With mortgage rates nearing 7% and prices rising for staples like ground beef and gasoline, Trump's record-low approval rating is dragging down Republican congressional candidates.