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Trump expects Fed to lower rates amid skepticism

Xinhua | Updated: 2025-07-27 14:38
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WASHINGTON - US President Donald Trump has voiced confidence that the Federal Reserve will lower interest rates, but experts remain skeptical that his words or actions to pressure the Fed chair will affect the outcome.

Trump told reporters on Friday that the meeting with Fed Chair Jerome Powell the previous day was positive and said he believes the central bank is ready to cut rates, which the president has been pressuring the Fed to do for months.

"I think we had a very good meeting on interest rates. And (Powell) said to me ... very strongly, the country is doing well," Trump said. "I got that to mean that I think he's going to start recommending lower rates."

Powell has resisted lowering rates, taking a wait-and-see approach to gauge whether Trump's sweeping tariffs would impact inflation.

The Fed has also described the tone of the meeting as positive, despite Trump's dispute with Powell over the overall costs of renovating Fed headquarters.

"We are grateful for the President's encouragement to complete this important project," the central bank said on the social platform X on Friday. "We remain committed to continuing to be careful stewards of these resources as we see the project through to completion."

Still, experts said Trump has little influence over Powell.

Brookings Institution Senior Fellow Darrell West told Xinhua that the Fed was designed to operate independently of political influence, as it is a data-driven institution and will not reduce interest rates unless there is a sound economic reason to do so.

"Nobody wants the Federal Reserve to cave to political pressure because it would threaten the long-term viability of the American economy," said West.

Echoing that view, Gary Clyde Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics, said, "I think Trump's pressure is just increasing Powell's resolve not to cut interest rates until there's a meaningful slowdown in the economy and a rise in unemployment."

Clay Ramsay, a researcher at the Center for International and Security Studies at the University of Maryland, pointed out that Powell alone does not control interest rate decisions.

"A majority of the current voting group in the Fed, a group whose composition changes at regular intervals, sets the rates ... So trying to embarrass Powell could be quite counterproductive," said Ramsay.

The Fed will hold its next policy meeting from July 29 to 30. The Chicago Mercantile Exchange Group's FedWatch Tool, which acts as a barometer for the market's expectation of the Fed funds target rate, showed that as of Saturday, the probability of the Fed keeping rates unchanged at the next meeting is over 95 percent.

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