Donald Trump Has Made Statements About the Federal Reserve (FED) and Interest Rates

U.S. President Donald Trump has issued strong messages regarding monetary policy and the role of the chair of the Federal Reserve in statements posted on the Truth Social social media platform.

Mr. Trump stated that no one would be appointed as Chair of the Federal Reserve if that person did not share his views, and he urged the newly appointed chair to support growth rather than harm the market.

Mr. Trump argued that the economic data released today is extremely strong, asserting that the U.S. economy has performed better than expected. He noted that the gross domestic product (GDP) has increased by 4.2%, compared to the market forecast of 2.5%, and stated that this increase was achieved "despite the downward pressure from the recent government shutdown caused by the Democrats."

However, according to Mr. Trump, the modern market structure no longer accurately prices such positive data. He argued that in the past, good news often boosted the stock market, but nowadays, investors create expectations of interest rate hikes due to inflation concerns, putting pressure on the market.

Arguing that this approach harms strong and healthy markets, Mr. Trump said: "Strong, even extraordinary, markets do not create inflation; the real issue is poor decisions and recklessness."

The U.S. President emphasized that the new chair of the Federal Reserve (Fed) should lower interest rates when the market is performing well, stating: "I want a Fed that strengthens a thriving market, not a Fed that undermines it unnecessarily." Mr. Trump argued that raising interest rates would stifle growth, preventing the U.S. economy from achieving an additional growth of 10, 15, or even 20 percentage points within a year.

Addressing the issue of inflation, Trump argued that price pressures will self-correct over time. He stated that interest rate hikes could be implemented at the appropriate time if necessary, but emphasized that the right time is not to stifle the growth of the market. Criticizing the current approach, Trump said, "America should be rewarded for its success, not pulled down by that very success."