Economists expect American interest rate reduction in September

The American central bank is under heavy pressure from Donald Trump to lower interest rates. Because Jerome Powell’s term as chairman ends in May 2026, and Trump can designate a new candidate, the independence of the Central Bank is under pressure.

Normally the US central bank should not care about politics, but now some policy makers seem to be talking to the mouth of Trump to get that prestigious job.

For the time being, however, an interest rate reduction appears unsaleable on July 30 because of the strong US economy, and we probably have to wait until September for the next one.

Central bankers talk Trump to the mouth

In addition to the strong American economy, we also carefully see some impact of the levies on inflation. It rises, and increasing inflation makes it even more difficult for the central bank to lower interest rates. After all, they stimulate the economy that does not need it, but they also create upward pressure on inflation.

Yet in the form of Christopher Waller and Michelle Bowman there are two central bankers who openly argue for an interest rate reduction in July. They themselves claim to have a good foundation for that, but according to experts they mainly do that to have a greater chance of the presidency.

In the meantime, a group indicates that Reuters has been concerned about the independence of the US Central Bank through Reuters through the political influence of Trump. 20 percent even indicated that they were seriously worried.

Powell will not surrender to Trump

As long as Jerome Powell is at the helm at the US central bank, Philip Marley from Rabobank does not expect Trumpian actions.

“This year it is still the US central bank of Powell. The current central bank is very careful, wants to wait for the data, and only starts moving if they have certainty.

There is currently a kind of policy paralysis and I think that is not going to change as long as Powell is in grip on the interest rate, “said Marey.

For now, an interest rate reduction seems to have a reasonable chance in September. 53 percent of economists indicate to a reduction during the September meeting. This corresponds to the current probability distribution on the option markets.