Trump's Policies Fuel Inflation, Ruling Out Rate Cuts

President Donald Trump has long argued that the US should have the lowest interest rates in the world. He believes interest rates should be around 1% or lower, and thinks this would fuel economic growth. However, his policies, particularly tariffs and the Iran war, are causing inflation to rise, making it difficult for the Federal Reserve to lower interest rates.

The AI revolution is also contributing to higher prices, as demand for AI hardware far exceeds supply, giving infrastructure providers significant pricing power. This has led to a supply-and-demand mismatch, further exacerbating inflationary pressures.

The Trump administration's tariffs have increased domestic manufacturing costs, which are often passed on to consumers in the form of higher prices. The Iran war has also disrupted global energy markets, leading to higher fuel prices and costs for businesses.

As a result, the Federal Reserve is unlikely to lower interest rates to stimulate economic growth, as this could slow down the AI data center build-out and potentially harm the stock market.