President Donald Trump Is Playing a Game of Chicken With the Federal Reserve. Who Will Blink First?
President Donald Trump has not been shy about his desire for the Federal Reserve to lower interest rates. Lower rates have historically been good for stocks; they make the cost of borrowing cheaper, which would help the country's future debt issuances, and they would also lower mortgage rates, assisting a broad swath of Americans who have been priced out of the housing market.Trump's request for lower rates, however, has been more or less denied by Federal Reserve Chair Jerome Powell, who thinks the Fed needs to take a wait-and-see approach, given recent data, and to see how recent policy initiatives by Trump will play out. With recent tariffs, Trump seems to be playing a game of chicken with the Fed. Who will blink first?Since the campaign trail, Trump has made it abundantly clear that he planned to impose tariffs to address the country's global trade deficit and bring manufacturing and higher-paying jobs back to the U.S. Many investors believed Trump would take a more scaled-back approach, assuming the president cares too much about the stock market to implement anything too drastic. However, this view, known as the "Trump put," has turned out to be untrue so far.Continue reading
President Donald Trump has not been shy about his desire for the Federal Reserve to lower interest rates. Lower rates have historically been good for stocks; they make the cost of borrowing cheaper, which would help the country's future debt issuances, and they would also lower mortgage rates, assisting a broad swath of Americans who have been priced out of the housing market.
Trump's request for lower rates, however, has been more or less denied by Federal Reserve Chair Jerome Powell, who thinks the Fed needs to take a wait-and-see approach, given recent data, and to see how recent policy initiatives by Trump will play out. With recent tariffs, Trump seems to be playing a game of chicken with the Fed. Who will blink first?
Since the campaign trail, Trump has made it abundantly clear that he planned to impose tariffs to address the country's global trade deficit and bring manufacturing and higher-paying jobs back to the U.S. Many investors believed Trump would take a more scaled-back approach, assuming the president cares too much about the stock market to implement anything too drastic. However, this view, known as the "Trump put," has turned out to be untrue so far.
