Fed should cut interest rate by a full point, Trump says

The US Federal Reserve should cut interest rates by a full percentage point, US President Donald Trump said on Friday as he reiterated his view that Fed Chair Jerome Powell has been too slow to lower borrowing costs.

“Europe has had 10 rate cuts, we have had none. Despite (Powell), our Country is doing great. Go for a full point,” Trump wrote in a social media post. Central banks typically limit rate moves to quarter point changes outside of crises.

The Fed last September did reduce rates by a half of a percentage point, after a faster-than-expected decline in inflation and a marked slowdown in the labour market. By the end of 2024 it had delivered two additional quarter-point rate cuts, and has held the policy rate steady since then, citing uncertainty over tariff policy and inflation still above its 2.0 per cent target.

Trump said the Fed could always raise rates again if cuts led to inflation.The president has repeatedly berated Powell for not cutting rates as he desires. The two men met face-to-face for the first time last week, with Trump telling Powell he was making a “mistake” by not lowering rates.

Powell has said the Fed will make policy decisions based solely on economic conditions and the outlook, with no political considerations.The Fed in May left the policy rate in the 4.25-4.5 per cent range, where it has been since December, and policymakers have since signalled they may leave it there for another few months as they wait for more clarity on how Trump’s tariff and other policies affect inflation and the labour market.

Financial markets are currently betting the Fed will resume cutting rates in September with a quarter-point reduction, after a Labor Department report Friday showed the job gains have slowed while the unemployment rate was steady at 4.2 per cent. The market’s policy rate bets are in line with Fed policymakers’ own projections, as of March, for 50 basis points of cuts this year.The European Central Bank has cut interest rates eight times since last June, and this month signalled it may now pause.