Trump's Rate Cut Push Sparks Inflation Warning
President Donald Trump has renewed his pressure on the Federal Reserve to cut interest rates, claiming that cheaper borrowing could unleash an unprecedented US economic boom. However, economists warn that such a move could worsen inflation.
The demand came after the recent jobs report showed nonfarm payrolls increased by 162,000 in August and July's job losses were revised away, indicating a stronger labor market than previously thought. Trump rejected the conventional notion that this growth could contribute to inflationary pressures.
'Success does not cause inflation. Stupidity causes inflation,' Trump said in the Oval Office, dismissing concerns about inflation as 'crazy.' He argued that lower interest rates would allow the US economy to expand at an extraordinary rate and reach a GDP of 12-15%.
Economists disagree with this prediction, warning that a cash influx could make inflation worse. They point out that Trump's own economic policies have contributed to high inflation, driven by tariffs and oil shortages caused by the war in Iran. The national debt has surpassed $40 trillion, and the 10-year US Treasury note rate rose to 4.79% on Friday.