US President Donald Trump has warned of what could happen to the US economy if the Fed Chair Jerome Powell refuses to act fast and cut interest rates. This is significant considering how a slowdown in the US economy could impact the crypto market.
Donald Trump Sounds Warning If Jerome Powell Refuses To Cut Rates
In a Truth Social post, Donald Trump stated that there can be a “slowing of the economy” unless Fed Chair Jerome Powell lowers interest rates. He affirmed that, with costs trending downward, it is almost impossible for inflation to occur, but a recession may be on the cards if Powell and his team fail to act.
This marks the US president’s latest call to Powell to cut interest rates. Trump alluded to the fact that the EU has already lowered rates seven times while the Fed Chair is yet to act. Interestingly, he accused Powell of lowering rates only last year to help Joe Biden and Kamala Harris win the Election, although that didn’t ultimately happen.
Despite Donald Trump urging Jerome Powell to cut rates, the Fed Chair has so far shown that has has no intention to lower interest rates. Instead, in a recent speech, Powell warned that Trump’s tariffs could lead to higher US inflation, suggesting that this is why the FOMC is refusing to ease its monetary policies just yet.
Meanwhile, with Powell refusing to lower interest rates, there are discussions that the US president could soon fire the Fed Chair. However, traders are betting against this happening and assert there is little chance it will happen this year.
Market expert Anthony Pompliano warned Trump against firing Powell, while Senator Elizabeth Warren stated that the stock market would crash if the US president did so. There is also the possibility that the crypto market could crash alongside the stock market.
Experts Expect Rate Cuts Despite Powell’s Hesitation
Despite Jerome Powell’s hesitation to heed Donald Trump’s calls to lower interest rates, experts still predict that there will be several Fed rate cuts this year. Citigroup expects the Fed to deliver an interest rate cut in June and maintains that there will be a total of 125 basis points (bps) of cuts this year.
Bank of America also recently predicted that there will be four interest rate cuts this year. They expect the first one to come at the May FOMC meeting, with the others coming in July, September, and December, respectively.
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