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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Trump pressures Federal Reserve to lower interest rates

By Andrew Ackerman and Jeff Stein Washington Post

President Donald Trump on Thursday said he would press the Federal Reserve to lower interest rates “immediately,” rekindling a fight over the historically independent U.S. central bank.

Addressing the World Economic Forum in Davos, Switzerland, Trump told a room of chief executives that he would “demand” lower interest rates. The Fed, chaired by Jerome H. Powell, is an independent body that is tasked with setting borrowing costs designed to spur or constrain economic activity.

“With oil prices going down, I’ll demand that interest rates drop immediately,” Trump said. “And likewise, they should be dropping all over the world. Interest rates should follow us all over.”

The remark represented an early salvo in what might prove a major confrontation between the newly returned president and Powell. During Trump’s first term, he proved repeatedly willing to publicly cajole Powell – whom he originally appointed to the position – over interest rates, provoking criticism from Democrats and other economists.

Trump’s Thursday remark also is a contrast from the message from other members of Trump’s circle, including hedge fund executive Scott Bessent, tapped to become treasury secretary. Bessent has told Senate lawmakers considering his nomination that the Fed should operate independently when it comes to monetary policy.

A Fed spokeswoman declined to comment on Thursday. After raising interest rates at a rapid clip to tackle dangerously high inflation, the Fed kept rates elevated for about a year before it began to lower them in September to shore up a softening labor market. In total, it cut rates a full percentage point in the final three policy meetings of 2024.

Its benchmark rate, which trickles through the financial system to influence what millions of consumers and businesses pay to borrow money, now sits at 4.25 to 4.50%.

To be sure, lower interest rates have yet to trickle down into the rates consumers see on many types of loans. For example, mortgage rates have increased in recent months, with the rate on the popular 30-year mortgage rising above 7% last week, according to mortgage giant Freddie Mac. Mortgage rates typically are correlated with long-term borrowing costs for the U.S. government, which have generally ticked up amid concerns about persistently-elevated inflation.

Lower interest rates could eventually help lower costs in the housing market.

But Fed officials have recently signaled a slower pace of future cuts, citing an uncertain economic outlook fueled by potentially inflationary trade and immigration policies that Trump promised on the campaign trail. Those policies include across-the-board tariffs on U.S. trading partners as well as mass immigration of undocumented immigrants.

“It’s not unlike driving on a foggy night or walking into a dark room of furniture,” Powell told reporters at the conclusion of the Fed’s December meeting. “You just slow down.”

Fed independence is important because it ensures that markets have confidence in the central bank’s ability to tackle inflation. Borrowing costs could balloon if markets believe the Fed’s decision-making is constrained by political factors.

Last month, Fed officials lowered the number of anticipated rate cuts expected this year to two, down from an earlier estimate of four. The Fed is also widely expected to pause cuts at its upcoming policy meeting next week, the first of 2025.

Separately on Thursday, Trump elevated conservatives’ claims that big banks have terminated services to certain customers for politically-motivated reasons. He admonished Bank of America CEO Brian Moynihan and JPMorgan Chase CEO Jamie Dimon, saying he hoped the leaders would open their banks to conservatives.

“I hope you’re going to open your banks to conservatives because what you’re doing is wrong,” Trump said, during his virtual exchange at the World Economic Forum.

Claims of “de-banking” took off after venture capitalist Marc Andreessen raised the issue on Joe Rogan’s podcast last year. Some conservatives have alleged that the banks are conspiring with the “Deep State” – or government employees – to limit their financial services.

Banking experts say there is no evidence that there was a top-down initiative to “de-bank” customers because of their politics, but banks are legally obligated to limit customers engaged in questionable or potentially illegal activity – and they typically can’t discuss confidential supervisory matters.

Cryptocurrency companies and their founders, in particular, have reported struggling to find banking services after regulators raised concerns about the industry’s ties to money launderers and terrorist financing.

In her recent memoir, first lady Melania Trump wrote that she was “shocked and dismayed” to learn that her bank had closed her account after the Jan. 6, 2021, attack on the U.S. Capitol. She wrote that the bank also refused to allow her son, Barron, to open a new one. She didn’t provide additional details, such as the identity of the bank in question.

The Post has previously reported that Trump may sign an executive order addressing the allegations.

Cat Zakrzewski contributed to this report.