- Donald Trump has asked for a 2.5% top 3% rate cut earlier this week.
- Fed Chair Jerome Powell is reportedly considering a resignation.
- Trump needs lower rates to boost economy, markets, and renew the US Debt.
- At present the US Fed interest rates are at 4.25% to 4.5% window.
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Trump Needs a 3% Rate Cut
In his social media post via the Truth Social, President Donald Trump has asked for a 3% rate cut in the next Federal Reserve meeting his demand for a rate cut came earlier this week amid a strong word-battle between Donald Trump and Fed Chairman Jerome Powell.
At present the US Fed interest rates are at 4.25% to 4.5% window. A 3% fall in rates could lift the crypto markets towards a major rally, with Bitcoin possibly crossing $150k in a single month.
Jerome Powell has been delaying a rate cut in 2025 because of high inflation expectations in the US, for the current year. However, his counterparts in the European Union, India, China, and Japan have been providing rate cuts to boost their economy amid an uncertain geo-economical scenario.
Trump’s need of a 3% rate cut is believed to be based on several factors starting from the stock market, to decrease the interest in the bond markets, and to help the US government renew its debt. A high bond market rate is difficult for companies to raise funds via open market sale of their bonds.
High interest rates also makes it difficulty for the US government to renew its debt. This year the US Government needs to raise $9 to $10 trillion at least.
- $5.7 trillion due for Treasury Bills repayment
- $2 trillion required to cover Fiscal Deficit
- $980 billion due for Interest Payments
- $1 trillion to $2 trillion for Treasury Notes
Will Jerome Powell Resign?
There has been considerable amount of rumors in the crypto markets that US Federal Reserve Chairman Jerome Powell might resign this month due to the pressure on him.
A Federal Reserve Chairman no matter how much independent always remains below the legislating power of the US Congress and the executive power of the US President.
Previously there have been enough evidence of US President Donald Trump dislike of Jerome Powell. However unlike the SEC Chief, the power to fire the Federal Reserve Chairman remains out of the executive power of the US President.
A resignation seems the only way out in the normal course of events. A forced exit through the legislature (US Congress) might seem like insulting for the Federal Reserve Chairman.
If Powell resigns Trump might get his way to make a major 3% rate cut in the Federal Reserve interest rates. At present the US Fed interest rates are at 4.25% to 4.5% window.
Disclaimer: Crypto markets are volatile in nature. All articles in this website are informational and are not financial advice. Please consult your financial adviser before investing.
