The Donald Trump administration is increasing pressure on the Federal Reserve to lower interest rates. This comes as the Federal Reserve faces inflationary challenges. The welcoming period for the new Federal Reserve Chair, Kevin Warsh, seems to be over, and Trump has called for a reduction in interest rates in recent weeks.
Trump's Pressure on the Federal Reserve
The Trump administration, particularly his economic advisor, Kevin Hassett, has expressed concerns about the Federal Reserve's decisions. Hassett has stated that if the Federal Reserve decides to make a significant change in rates, Trump will express his opinion. He also emphasized that the President believes there is enough room to lower rates.
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The Federal Reserve has not raised interest rates since 2023, but with new inflation data indicating an annual increase of 3.4 percent, the likelihood of a rate hike in this week's meeting is estimated to be over 90 percent. The Federal Reserve's target for inflation is 2 percent, and this issue raises concerns about the economic situation.
Inflation Challenges and Contributing Factors
Several factors have contributed to rising inflation. Deutsche Bank analysts have pointed to negative impacts from the trade war with Canada, rising energy prices, and pressures from artificial intelligence. The price of U.S. crude oil has reached $106 per barrel, and Brent oil is around $109. These increases have also affected gasoline and diesel prices, putting significant pressure on farmers and truck drivers.
Economic analysts warn that raising interest rates may lead to new risks. The job market appears stable, with an unemployment rate of 4.1 percent, but the effects of Trump's tariffs and energy shocks are likely to diminish without additional support. According to economists, if the Federal Reserve raises rates, it could slow economic growth, which could lead to unemployment and ultimately create a negative economic cycle.
While technology companies are making significant investments to strengthen artificial intelligence infrastructure, the average wage growth for Americans has decreased to 3.1 percent per year. This situation reflects the complex challenges that the economy is facing due to investments related to artificial intelligence.
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