If Trump intervenes in Fed, market trouble may ensue

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If Trump intervenes in Fed, market trouble may ensue


The Marriner S. Eccles Federal Reserve building in Washington, DC, U.S., on Thursday, Sept. 12, 2024.

Stefani Reynolds | Bloomberg | Getty Images

An independent central bank is seen by most (including this newsletter) as the bedrock of a functional economy. Officials steer the economy by calibrating the benchmark interest rate on which bank loans and mortgages, among other debt, are based.

Corporations and consumers, in general, like low interest rates because the cost of borrowing is cheaper. The former is incentivized to expand and invest, which, in turn, tend to increase income and spending among the latter. But such behavior can overheat the economy, causing prices to shoot up.

U.S. President Donald Trump’s repeated calls for Federal Reserve Chair Jerome Powell to cut interest rates might make businesses and people happy — at the cost of letting inflation run rampant again. Factor in Trump’s tariffs, which are taxes on imports and hence fundamentally price increases, and inflation could be getting two shots in the arm.

That’s why central bankers tend to operate independently from the government. An administration that aims to please the populace might cut rates despite high inflation, leading to further economic difficulties.

It’s a relief markets in the U.S. and Europe were on a break for the Good Friday holiday when Trump made his comments.

What you need to know today

Trump again calls for Powell to cut rates
U.S. President Donald Trump said Friday that “if we had a Fed Chairman that understood what he was doing, interest rates would be coming down, too.” The White House said Friday that officials are assessing whether they can remove the Fed chair. This is not the first time Trump has criticized Powell’s approach to U.S. monetary policy.

Growing disapproval of Trump’s economic handling
According to a CNBC survey of 1,000 Americans, 55% of respondents disapproved of Trump’s handling of the economy, the first time in any CNBC poll that he has been net negative on the economy while president. More Americans now believe the economy will get worse than at any time since 2023, and they are sharply more pessimistic about the stock market, according to survey results.

Economic activity might ‘fall off’ in summer
The U.S. economy could be experiencing an elevated level of activity now as shoppers and businesses stock up on goods before tariffs kick in, Chicago Fed President Austan Goolsbee said Sunday. “Activity might look artificially high in the initial, and then by the summer, might fall off — because people have bought it all.” Sectors most affected include the auto industry and electric components, Goolsbee said.

Executive order to overhaul State Department
The Trump administration could soon roll out sweeping changes to the U.S. State Department, according to a 16-page draft executive order obtained by CNBC. If enacted, the order would shutter American embassies across Southern Africa, eliminate bureaus that work on issues like democracy and human rights, as well as international organizations like the United Nations.

U.S. to impose fee on Chinese-built ships
The Trump administration on Thursday announced fees on Chinese-built vessels after an investigation by the Biden-Trump administrations found China’s acts, policies and practices were unreasonable and burden or restrict U.S. commerce. The new fee charges are based on the net tonnage of a vessel. The fees will be charged once per voyage and not per port, as originally proposed.

Ukraine signs outline of mineral deal with U.S.
Yulia Svyrydenko, Ukraine’s minister of economic development and trade, said Thursday the country and the U.S. had signed a “memorandum of intent” that was the basis of an agreement for both nations to jointly develop Ukraine’s natural resources. However, on Friday, U.S. Secretary of State Marco Rubio said America will walk away from trying to broker a Russia-Ukraine peace deal within days unless there are clear signs that a deal can be done.

[PRO] Earnings might displace tariffs as focus
Market gyrations because of Trump tariffs might be subdued — but not entirely subside — this week, according to strategists. Investor attention will turn to first-quarter earnings reports, with Tesla and Alphabet announcing their performance on Tuesday and Thursday, respectively.

And finally…

Smart robotic arms work on the production line at the production workshop of Changqing Auto Parts Co., LTD., located in Anqing Economic Development Zone, Anhui Province, China, on March 13, 2025. (Photo by Costfoto/NurPhoto via Getty Images)

Nurphoto | Nurphoto | Getty Images

Where ‘Made in China 2025’ missed the mark

When Beijing released its “Made in China 2025” plan in 2015, it was met with significant international criticism for promoting Chinese business at the expense of their foreign counterparts. The country subsequently downplayed the initiative, but has doubled-down on domestic tech development given U.S. restrictions in the last several years.

Since releasing the plan, China has exceeded its goals on achieving domestic dominance in autos, but the country has not yet reached its targets in aerospace, high-end robots and the growth rate of manufacturing value-added the European Chamber of Commerce in China said in a report last week, citing its research and discussions with members.

Out of ten strategic sectors identified in the report, China only attained technological dominance in shipbuilding, high-speed rail and electric cars.


Central banking,Federal Reserve Bank,Foreign policy,Prices,Jerome Powell,Donald Trump,United States,Markets,World Markets,Economic events,business news
#Trump #intervenes #Fed #market #trouble #ensue

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