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PoliticsActive · 26h

Trump's 1% rate demand seen as scapegoating ahead of midterms

Analysts say the president's calls for dramatic Fed cuts are impractical deflection from inflation and affordability issues.

newest coverage 18h agosummary written 1d ago4 pieces NewswiresMastodonGoogle News

What to know

  • Trump is calling for a 1% federal funds rate to address inflation and affordability issues ahead of midterm elections, but analysts say such a cut would destabilize global bond markets and ultimately cost the US more to borrow.
  • Inflation has risen to 3.7% since Trump's term began due to tariffs and energy costs from the US war with Iran; the Fed doesn't expect inflation to return to its 2% target until 2029.
  • Some Trump allies privately praised Fed Chair Warsh's recent rate hike as necessary for inflation control, while publicly Trump continues criticizing the Fed—suggesting the 1% demand functions as political deflection rather than serious policy.
  • Trump is also attempting to remove Fed Governor Lisa Cook and awaiting an inspector general's probe into former Chair Powell's oversight of a Fed construction project.

“The president in his own way is saying, 'I don't like the pain of this,' but he should be clear that it's not the fault of the Fed for having to raise rates.”

Grover Norquist · Investing.com News ↗

Donald TrumpDonald Trump PresidentKevin WarshKevin Warsh Federal Reserve ChairJ. Benson Durham Investment analyst, DASM founderGrover NorquistGrover Norquist Conservative economic adviser to Trump

Trump's 1% rate demand seen as scapegoating ahead of midterms
ctvnews.ca

How it unfolded 2 developments, newest first · click a bar or a number to jump articlesposts

Peak 2 pieces in one half hour at Yesterday, 6 AM; 4 pieces over 27 hours (3 articles · 1 post) Yesterday, 6:13 AM — quietYesterday, 6:43 AM — 2 pieces · 2 articles — Newswires 2Yesterday, 7:13 AM — quietYesterday, 7:43 AM — 1 piece · 1 post — Mastodon 1Yesterday, 8:13 AM — quietYesterday, 8:43 AM — quietYesterday, 9:13 AM — quietYesterday, 9:43 AM — quietYesterday, 10:13 AM — quietYesterday, 10:43 AM — quietYesterday, 11:13 AM — quietYesterday, 11:43 AM — quietYesterday, 12:13 PM — quietYesterday, 12:43 PM — quietYesterday, 1:13 PM — quietYesterday, 1:43 PM — quietYesterday, 2:13 PM — 1 piece · 1 article — Google News 1Yesterday, 2:43 PM — quietYesterday, 3:13 PM — quietYesterday, 3:43 PM — quietYesterday, 4:13 PM — quietYesterday, 4:43 PM — quietYesterday, 5:13 PM — quietYesterday, 5:43 PM — quietYesterday, 6:13 PM — quietYesterday, 6:43 PM — quietYesterday, 7:13 PM — quietYesterday, 7:43 PM — quietYesterday, 8:13 PM — quietYesterday, 8:43 PM — quietYesterday, 9:13 PM — quietYesterday, 9:43 PM — quietYesterday, 10:13 PM — quietYesterday, 10:43 PM — quietYesterday, 11:13 PM — quietYesterday, 11:43 PM — quietToday, 12:13 AM — quietToday, 12:43 AM — quietToday, 1:13 AM — quietToday, 1:43 AM — quietToday, 2:13 AM — quietToday, 2:43 AM — quietToday, 3:13 AM — quietToday, 3:43 AM — quietToday, 4:13 AM — quietToday, 4:43 AM — quietToday, 5:13 AM — quietToday, 5:43 AM — quietToday, 6:13 AM — quietToday, 6:43 AM — quietToday, 7:13 AM — quietToday, 7:43 AM — quietToday, 8:13 AM — quietToday, 8:43 AM — quiet 12
8 AM4 PMtodaynow · 9:13 AM ET
  1. background

    Inflation backdrop: 3.7% in July, target 2% not until 2029 — The Fed's preferred inflation measure stood at 3.7% in July and the central bank does not expect it to reach the 2% target before 2029, suggesting sustained price pressure throughout Trump's term. Inflation has risen since early in his presidency due to tariffs and energy costs from the US war with Iran.

  2. background

    White House liaisons call 1% demands unrealistic — A White House ally working with Warsh told Reuters that calls for 1% rates ignore how global bond markets function and would harm only bond investors.

  3. background

    Some Trump insiders privately backed Warsh's rate hike — Despite public criticism, administration allies privately praised Fed Chair Warsh after his rate decision, viewing inflation control as crucial heading into midterms.

  4. background

    Trump allies frame 1% calls as political deflection — Figures close to Trump characterize his 1% rate demands not as serious policy prescription but as deflection from high consumer prices and affordability issues ahead of midterm elections in November.

  5. 2

    Analysts1% rates would trigger financial crisis

    Investment analysts argue that a 3-percentage-point rate cut would cause massive global financial dislocation, driving up Treasury rates as investors price in higher inflation, enabling countries like Germany to outbid the US for capital, and causing the dollar to collapse.

    “A 3-percentage-point cut by the Fed 'seems cataclysmic,' said J. Benson Durham, founder of DASM investment research firm.”
    — J. Benson Durham
  6. 1

    Trump criticizes rate hike, repeats 1% demand

    After Warsh's rate decision, Trump criticized the move and reiterated his call for a 1% federal funds rate, down from the current 3.75% to 4% range.

    “The 1% rate he keeps demanding from the US Federal Reserve is impractical and would likely backfire.”
    — Reuters analysts · source
    1. 2 outlets Analysis-There’s a reason Trump is the only one talking about 1% rates

      first by Investing.com News, 1d ago · also Yahoo Finance

  7. background

    Fed under Kevin Warsh raises rates — The Federal Reserve, led by Chair Kevin Warsh (Trump's handpicked successor to Jerome Powell), raised interest rates.