In the current system, Trump argues that interest rates should go down and puts serious pressure on the Fed by accusing Powell of deliberately spoiling the dynamics of the economy with high interest rates. As a result of this pressure, the news reflects that there is a serious conflict between the Fed and Trump. So, the question is: does Trump really want interest rates to go down?
In fact, although inflation is no longer a problem in the U.S economy, high interest rates still cause the wheels of the economy to run slowly and the desired growth to not be achieved. The 50 basis point interest rate cut made during the Biden era before Trump came to power still stands before us as the main reason for a debate. The interest rate cut made by the Fed at that time is considered a completely political move. Today, Trump harshly criticizes the FED, which made a 50 basis point interest rate cut, for not giving the green light for any interest rate cuts.
While we watch this theater, stock markets are falling in the background, investors' expectations are falling even lower, and unhappiness and unrest are increasing. Of course, everyone turns their eyes to Trump while these things are happening. But there is a great defense for Trump at that point: The FED is late for the necessary actions. We need time to understand whether the Fed is late or not, because we still do not have enough data flow on the negative or positive effects of the tariff wars. Although time is completely against Trump, he may be using his intelligence at a high level right now. As long as Powell does not approach interest rate cuts, Trump will put forward that he made a mistake behind all the failures.
Considering these possibilities, I think it would be logical for Trump not to really want a rate cut. As long as he has a "scapegoat", he will ensure that the markets go down, the economy cools down, and people will be happy by making moves that will revive the economy early when the midterm elections come.
Although this possibility is low, it is obvious that it provides serious benefits for Trump. Although Trump initially kept Powell under serious stress and aimed for him to lower interest rates, it is also possible that he may have resorted to these practices as a plan B as a result of mutual disagreements.
The horizontal moves that will continue until mid-year and the interest rate cut that will come in June will prepare the environment for him to say “I told you so”. No matter how much the markets are moving downward right now, the fact that interest rate cuts are inevitable, stagflation has become a threat, and Trump will never allow an economic defeat during his term, always makes investors believe that better days will come.
What do you think about Trump's sincerity in accusations of high interest rates?
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