An increase in the number of U.S. jobs that was higher than expected makes it unlikely that the Federal Reserve will cut interest rates soon.An increase in the number of U.S. jobs that was higher than expected makes it unlikely that the Federal Reserve will cut interest rates soon.
President Donald Trump urged Federal Reserve Chairman Jerome Powell to slash interest rates by a full percentage point despite a better-than-expected jobs report Friday.
Trump, who regularly badgers Powell to lower rates, argued for the steep cut even as he maintained that the U.S. economy is “doing great.”
“Go for a full point, Rocket Fuel!” Trump wrote in a Truth Social post.
Markets forecast a virtually zero chance of any rate cut — much less a 1 percentage point decrease — following the Federal Open Market Committee’s next meeting later this month.
The Fed cut rates by one full point in total during President Joe Biden‘s final year in office.
The last time the central bank made a single rate cut of a full percentage point was in March 2020 to address economic fallout from the onset of the Covid-19 pandemic.
The president’s latest jab at Powell came after the Bureau of Labor Statistics reported that U.S. hiring in May rose more than predicted.
Nonfarm payrolls rose 139,000 for the month, exceeding Dow Jones estimates for 125,000.
Analysts were bracing for a weaker result that would reflect the impact of Trump’s tariff policies, and other signs of a potentially slowing economy.
Trump complained Friday that other major central banks have lowered their rates while the Fed has stood pat.
Fed policymakers worry that Trump’s tariffs could cause a spike in inflation.
The European Central Bank earlier this week lowered its benchmark rate a quarter point — its eighth cut since last June. The ECB indicated that would be its final cut of the year.
The ECB eased on the notion that both inflation and economic growth were weakening.
In a follow-up message, Trump argued that the cuts would enable the U.S. to lower both long- and short-term rates “on debt that is coming due.”
The president added that if inflation should flare back up, Powell could ratchet rates higher in response.
“Very Simple!!! He is costing our Country a fortune,” Trump wrote of Powell.
“Borrowing costs should be MUCH LOWER!!!”
Trump peppered his latest demand with the same insults he has previously aimed at the central bank’s chairman.
“‘Too Late’ at the Fed is a disaster!” Trump said of Powell.
The president added that the U.S. economy was only thriving “despite him.”
Before Friday’s jobs report, traders had been looking for the next interest rate reduction to come in September.
But the odds of that decreased following the report’s release, which also noted that average hourly wages grew at a 3.9% annual pace, 0.2 percentage point more than expected.
Traders before Friday estimated the chances of the Fed cutting rates in September at about 74%. That dropped to about 62% following the report.
Traders now give just a 22% chance that the Fed will cut rates more than twice by the end of 2025, according to CME Group data.
