Traders raised their bets on a Federal Reserve interest rate hike after Friday's blockbuster jobs report. President Trump, however, threatened drastic action if the central bank fails to go in the opposite direction. In a Truth Social post, he demanded the Federal Reserve cut interest rates and warned he would move to halt trade with nations where the US runs a deficit if it doesn't, Reuters reports. Trump argued a "strong country" deserves cheaper borrowing costs and said the US should have the world's lowest rates.
- "LOWER THE RATE OR I'LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT," Trump wrote, claiming that the Supreme Court has acknowledged that he has the "absolute right" to do so.
Trump urged Fed chair Kevin Warsh and the central bank's board to "get smart," and "BE PATRIOTS for a change." CNBC describes the trade threat as "extreme," noting that the US has trade deficits with numerous countries, including top trading partners. Trump, often resorting to personal insults, repeatedly called for Jerome Powell, Warsh's predecessor, to cut rates, but the pressure campaign eased after Warsh became Fed chair in May.
The Fed is widely expected to raise its key interest rate before the end of the year in an effort to tame inflation, which has been above the Fed's 2% target for years, the AP reports. According to CME FedWatch, expectations for a rate hike at the Fed's September meeting, which will conclude on Sept. 16 rose to 60% on Friday, up from 49% the previous day. Fed governor Christopher Waller said Thursday that he will support holding rates steady if data releases next week show inflation is easing, and will consider a rate hike "if inflation comes in hot," the New York Times.
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