President Donald Trump again attacked the Federal Reserve's interest rate policy on Wednesday, saying strong economic data should not be a reason for the Fed to delay rate cuts, and that the United States should have borrowing costs far below current levels. Trump accused some Fed governors appointed under former Presidents Barack Obama and Joe Biden of possibly having political motives in rate decisions, but exempted Kevin Warsh, the Fed chair he nominated early this year, saying Warsh is doing an excellent job after taking office in May, succeeding Jerome Powell, who remains a Fed governor. Trump called on the Fed to cut rates further to support economic growth and help reduce the government's financing costs, as US government debt approaches 40 trillion dollars. He noted that in the past, when the US reported strong economic figures, interest rates often fell, but now the opposite is happening. Trump's comments came the same day the Federal Open Market Committee released minutes of its July meeting, which showed many Fed officials saw rates possibly needing to stay high if inflation did not show enough progress in slowing. Although inflation data released after that meeting were broadly better, annual inflation remains above the Fed's 2 percent target. Meanwhile, the US economy grew at an annual rate of just 1.5 percent in the second quarter, below market expectations and down from 2.1 percent growth in the first quarter. Trump also voiced displeasure with US interest rates compared with other countries, especially Switzerland, where the policy rate is near zero. He said Switzerland has a rate of about 0.5 percent while the US pays about 3.5 percent, and said he has the right to cut business ties with a country like Switzerland. However, Trump said he does not see the US facing a bond market problem, even though he views the rates the country pays as unfairly high. Before Trump's comments the same day, the US Treasury announced an increase in the size of its government bond buyback program after long-term yields rose sharply, with the buybacks focused on bonds maturing in 10 years or more, amid pressure in the long-term bond market and concerns about rising government borrowing costs.
Trump pressures Fed to cut rates, implying lower policy rate.
Pressure for rate cuts suggests lower yields.
