We appear to be heading for the next interest rate cut in the United States tomorrow. Interest rates there are still relatively high compared to Europe, but that could change next year. Donald Trump is very clear about what he expects from the successor to the Fed chairman: interest rates must be lowered.
Trump: new Fed boss must immediately cut interest rates
The American president leaves no doubt about it. The next chairman of the Federal Reserve (the central bank) must immediately cut interest rates. In an interview with Politico, he says that this is a decisive condition for his choice. When asked whether he expects the new Fed boss to take immediate action, Trump responds succinctly: “Yes.”
Interest rate cuts are generally good for crypto. They ensure that borrowing becomes cheaper, creating more liquidity in the market. That extra capital then looks for returns, often finding its way into riskier assets such as cryptocurrencies.q
For a successor, one name stands out: Kevin Hassett. He is a former White House economic adviser. Hassett also has close ties to the crypto sector, including through the Digital Asset Market Working Group and his $1 million investment in Coinbase.
His appointment could potentially bring the Fed closer to the interests of the crypto market, and is in line with Trump’s desire for rapid interest rate cuts. Hassett has also often advocated interest rate cuts.
Jerome Powell’s term as chairman of the Federal Reserve ends in May 2026 to be precise. Trump has repeatedly criticized him, mainly because he believes interest rates have remained too high for too long.
Ironically, those high interest rates are partly the result of Trump’s own policies. Powell previously indicated that interest rates would likely have been lower if Trump had not imposed high tariffs. It is remarkable that Powell was appointed by Trump himself in 2018. Initially, the then president was still full of praise for his policy.
Trump’s compliments were partly because Powell started cutting interest rates from 2019: in two years, the rate fell from 2.5 to 0.25 percent. This was followed by eventful years with the corona pandemic. Powell then implemented strong support measures, followed by aggressive rate hikes to curb inflation. Interest rates eventually rose to 5.5 percent and remained there for just over a year before the first cut was initiated.
The two-day FOMC meeting will take place today and tomorrow. The interest rate decision will be announced tomorrow at 8:00 PM and Powell will explain the policy in a press conference at 8:30 PM. The chance of an interest rate cut is extremely high: the futures market currently estimates it at 89.6 percent.
Geopolitical warnings and fierce criticism of Europe
Trump went further than just interest in the interview. He also strongly criticized Europe, which he described as “decayed” and “weak.” According to him, European leaders are too politically correct and lack decisiveness. He is gloomy about the war in Ukraine: he believes that President Zelensyy should recognize that Ukraine cannot keep everything and calls for a deal with Russia.
He also does not spare his words about Venezuela. Nicolás Maduro’s days are numbered, Trump said. He does not even rule out US ground troops in the Latin American country.
Source: https://newsbit.nl/donald-trump-nieuwe-fed-voorzitter-moet-direct-de-rente-verlagen/
