Trump threatens to halt trade if Fed won't cut rates — SkimNews
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- Trump called on the Federal Reserve to lower interest rates on Friday after the Bureau of Labor Statistics reported 162,000 jobs added in August, well above the 53,000 economists had forecast.
- Trump posted on Truth Social that a "STRONG COUNTRY MEANS A LOWER INTEREST RATE" and warned: "LOWER THE RATE OR I'LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT."
- The Federal Reserve has held rates steady at a range of 3.5 to 3.75 percent through its last five meetings, with annual inflation sitting at 3.7 percent year-over-year in July according to the PCE price index — well above the 2 percent target.
- Friday's strong jobs data actually increased the odds of a rate hike rather than a cut, as the report eased fears that higher rates were weakening the labor market and may let the Fed pivot toward fighting inflation.
- Traders are now pricing in a roughly 60 percent chance that the Fed hikes rates at its next meeting — a scenario that directly conflicts with Trump's demand for cuts.
Why it matters: Trump is demanding rate cuts at the precise moment strong labor data makes a hike more likely — traders now price a 60% chance of a hike — putting him on a collision course with the Fed's inflation mandate. His threat to weaponize trade deficits against any country that doesn't pressure the central bank marks an escalation beyond jawboning into economic coercion.
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