Trump put pressure on Fed Chairman Powell to consider interest rate cuts appropriate

Jackson Hole/Washington. Given the weakness in the labor market and more moderate inflation, US Federal Reserve Chairman Jerome Powell now considers interest rate cuts appropriate. Firstly, the labor market has weakened significantly, thus posing downside risks, the Federal Reserve Chairman said at a central bank conference in Jackson Hole, Wyoming. At the same time, inflation is largely under control. As usual, Powell did not specify a specific timeframe for a potential interest rate cut.

At the same time, he warned: "Higher tariffs have begun to drive up prices in some commodity categories." US President Donald Trump has pushed for tariffs on imports from dozens of countries in recent months, hoping to generate additional revenue.

The Fed kept its key interest rate high at its last meeting. For a good six months, it has remained in the range of 4.25 to 4.5 percent – ​​the rate at which commercial banks can borrow money from the central bank. A lower key interest rate can be more lucrative for consumers and businesses who want to borrow on better terms. More money in circulation can, in turn, stimulate the economy – one of Trump's arguments. However, interest rates that are too low could further fuel inflation, which is why Powell has so far advocated a more restrictive stance.

Trump, on the other hand, is convinced that Americans will no longer be able to afford home ownership because of Powell's policy. In response to the denied interest rate cuts, the US president has repeatedly called for Powell's resignation – although it remains unclear whether he can actually fire him. Legally, it has not been conclusively determined whether a president can dismiss the head of the central bank.

RND/dpa