Federal Reserve Chairman Jerome Powell looks set to give President Trump his wish and cut US interest rates in an attempt to halt the economic slowdown, which has led to criticism of his policies.
Strong jobs report, low inflation, and other countries around the world doing anything possible to take advantage of the United States, knowing that our Federal Reserve doesn’t have a clue! They raised rates too soon, too often, & tightened, while others did just the opposite….
— Donald J. Trump (@realDonaldTrump) July 6, 2019
This has led Mr Powell to publically defend his position indicating that he would not step down if asked to by President Trump during his recent testimony to the House of Representatives Financial Services Committee, on Capitol Hill. However, on this one we sort of agree with President Trump given that US rates are way above the rest of the G7, with Canada being the closest with rates at 1.75%. To put this into perspective US rates at 2.5% are on a par with Chile & Romania and at least 40% higher than the likes of Albania, Thailand & Poland. These high rates are keeping the dollar artificially strong and feeding into commodity prices which are often traded in $.
US Fed chairman Jerome Powell under pressure to cut interest rates.
Image:Paul Brady Photography/Shutterstock
We would not rule out a 0.5% cut in July and possibly a further 0.25% before the year-end.
