US President Donald Trump has called for interest rate cuts again to accelerate economic growth. Describing Fed Chairman Jerome Powell as a "big loser," Trump argued that if interest rates are not cut immediately, the economy could slow down. According to Trump, now is the time for quantitative easing.
What is Trump Saying?
Trump lashed out at Fed Chairman Powell in his latest statement with very harsh terms. Reminding us that the European Central Bank has cut interest rates seven times this year, he claimed that the US is lagging behind. Trump, who particularly implies that interest rate moves made during election periods have political purposes, has the following prominent messages:
- Things are going well in customs negotiations.
- The US will make a lot of money from this process.
- Inflation is under control and is almost at zero.
- Interest rate cuts have now become inevitable.
How Will Quantitative Easing Affect the Market?
Trump's call for a rate cut actually sends a clear signal to the markets: Quantitative easing. Such policies usually mean more liquidity in the markets. As a result:
It may create effects such as
Upward movements in stock markets,
Increase in demand for risky assets,
A new wave of rise in cryptocurrencies. This call, especially made at a time when the US is entering an election atmosphere, may signal an early bull period to the markets.
Will the Fed Respond to Trump's Call?
The Fed, chaired by Jerome Powell, has been taking cautious and careful steps recently. However, with the permanent decline in inflation and signals of a possible slowdown in economic growth, it may open the door to interest rate cuts. These statements by Trump will increase public pressure on the Fed.
Is It the Beginning of a New Era for the Markets?
Trump's interest rate cut request means much more than a political statement. The desire for monetary expansion behind this call may bring a positive atmosphere to the markets. However, the response the Fed will give will be the most critical factor in determining how financial markets will shape in the coming period.
