US President: Interest Rates Should Fall Significantly
US President Donald Trump said on Friday, February 20, that he expects a significant drop in interest rates, during remarks in which he was referring to a new chairman of the Federal Reserve.
"We have a totally incompetent chairman of the Federal Reserve who likes high interest rates for political reasons, but we're going to have a very good one, and interest rates should come down substantially," he added at a press conference.
Trump announced last month his intention to nominate Kevin Warsh to succeed Jerome Powell when his term as Federal Reserve chairman ends in May.
Traders took a pessimistic view of US economic growth, as GDP rose by only 1.4% in the fourth quarter. This was significantly lower than the 2.5% growth forecast by economists surveyed by Dow Jones.
In contrast, the 4.4% growth rate in the third quarter significantly exceeded expectations.
Meanwhile, the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred inflation gauge, showed inflation holding steady in December. Excluding volatile food and energy prices, the core PCE index rose 3%, in line with expectations.
Policymakers at the Federal Reserve are divided between those concerned about supporting the labor market and those more focused on inflation. While the overall pace of price increases has been slowing, inflation remains above the central bank's 2% target. Minutes from the Fed's January meeting indicate that some officials will need more evidence of slowing inflation before voting on further interest rate cuts.
