Trump Wants a Rate Cut
President Trump has been calling for the Federal Reserve to begin cutting interest rates, arguing that its policy is too tight for a slowing economy. Investors increasingly seem to agree with him. Whether they’re right remains to be seen. But one thing is clear: the market is not aligned with the Fed.
As recently as March 19, the Federal Reserve’s own projections—the so-called dot plot—showed the median Fed official expected the federal funds rate to end the year at 3.9 percent. That would imply just one or two modest cuts by December.
But traders are betting otherwise. According to the CME FedWatch Tool, there is now less than an eight percent chance that the funds rate will still be above 3.75 percent by year’s end. The most likely scenario is three or more cuts, bringing the rate into the 325–350 basis point range.
The market doesn’t believe Powell; and for now, it’s siding with Trump.
The Paradox of Powell’s Optimism, Trump’s Concern
The irony in all this is that Trump seems to agree with his critics, including many on Wall Street, that the economy is fragile and needs support. Powell, by contrast, sounds increasingly like…
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