Trump’s Fed nightmare: Rates won’t be slashed. They could surge now
The US president’s demands for falling interest rates are going to be ignored when the Federal Reserve responds to last month’s hotter-than-expected inflation rate.
The inflation data underscores why US voters gave the Republicans such a thrashing at the midterm elections. For ordinary US households, the cost-of-living pressures are real and intensifying.
The result of the midterms – a Democrat majority in both chambers of Congress – will help the Fed if it, as expected, starts more aggressively raising US interest rates. That might infuriate a president who wanted Warsh to deliver greatly lower rates, but there is little he can do about it.
Trump has tried, unsuccessfully, to remove former Fed chair Jerome Powell from the board, threatening to prosecute him for cost overruns in the renovations of the Fed’s Washington headquarters. He’s still trying to unseat another governor, Lisa Cook, with flimsy accusations of mortgage fraud.
Even if he were able to sack Cook (there is a handpicked administration panel “investigating” her), or Powell decided to retire before his term ends in January 2028, the Democrats are most unlikely to approve a new Trump nomination to the board. And other Fed governors are now less likely to feel intimidated by potential administration responses to votes in favour of rate rises.
