Trump anticipates 'big cut' in US interest rates this week
What's the story
US President Donald Trump has predicted a "big cut" from the Federal Reserve (Fed) this week. The prediction comes ahead of an important meeting where the central bank's governors are likely to loosen policy for the first time in nine months. "I think you have a big cut," Trump told reporters on Sunday while returning to Washington.
Rate adjustment
Fed likely to lower interest rates on September 17
The Federal Reserve is expected to lower interest rates on September 17, as it deals with a weakening labor market and persistent inflation. The move also comes in light of Trump's unprecedented demand for lower borrowing costs. A Bloomberg survey of economists suggests a median estimate of a 25-basis-point reduction.
Rate pressure
Trump has been pressuring Fed Chair for months
Trump has been pressuring Fed Chair Jerome Powell for months to cut rates. He has also repeatedly suggested that Powell should resign from his position. The pressure comes amid recent weak economic reports, which have sparked fears of a potential slowdown in the labor market. This could threaten consumer spending and growth, further complicating the Fed's decision-making process.
Inflation impact
Inflation remains above Fed's target
Despite the looming threat of a labor market slowdown, inflation remains above the Fed's 2% target. It could increase further if tariffs drive up costs. These factors have made some officials wary about making hasty decisions on policy changes. Powell's term as Fed Chair is set to end in May 2026, and Trump is currently considering his successor.