Pomp's theory: Trump deliberately disrupted the market to lower interest rates

According to a market commentator, the Trump administration may deliberately create instability in the stock market to force Federal Reserve Chairman Jerome Powell to lower interest rates. Bitcoin commentator Anthony Pompliano said in a March 10 post by X that doing so would increase the likelihood that the U.S. won't need to refinance its roughly $7 trillion debt in the next few months.

U.S. President Donald Trump and Treasury Secretary Scott Bessent are "taking matters into their own hands; they're driving asset prices down to force Jerome Powell to cut interest rates," said Pompliano, founder and CEO of Professional Capital Management and host of The Pomp Podcast.

At the end of January, Powell announced that the Fed would not lower interest rates from its current target of 4.25% to 4.5% despite calls to do so from Trump. Pompliano said the market's recent panic was partly due to Trump's tariffs — and was used to create a more favorable bond market while lowering the yield on 10-year Treasury bonds. He noted that the yield on 10-year Treasury bonds has fallen from nearly 4.8% in January to 4.21% now — a sign that Trump's supposed strategy is "on the right track."

Regardless of whether Pompliano's theory is true or not, the stock market has recently plunged and cryptocurrencies have been hit even harder. Google Finance data showed that broad market index funds such as State Street's Standard & Poor's 500 (SPY) index fund fell 2.66% on March 10 alone, while the Nasdaq-100% fell 3.8%. Both indices are down 7.32% and 10.7% over the past month, while Bitcoin ( BTC ) down 27.4% from an all-time high of $108,786 and more than $1.2 trillion has been wiped off the crypto market cap since December 17. Pompliano said that if the stock market continues to plunge, then a "first-come-first-served" race will take place between Trump and Powell. While Trump has not endorsed such a strategy, Pompliano pointed to a Fox News interview on March 9 in which Trump said: "Nobody can get rich when interest rates are high because people can't borrow money." Pompliano added that lowering interest rates would also benefit American consumers: "The big goal, lower interest rates, and that will lead to more economic activity, thanks to access to cheap capital. Give people cheap capital and they're going to do everything with it."

CME FedWatch, a tool used to measure the Federal Reserve's expectations for interest rate changes, has made a prediction that there is a 96% chance that the target rate will remain in the range of 4.25% to 4.50% after the Federal Reserve's next meeting on March 19 However, the likelihood that the target interest rate will be lowered at the next meeting of the Federal Reserve on May 7 is close to 50-50. The Federal Reserve usually avoids lowering interest rates when inflation is high because one of their main goals is to maintain price stability. However, a Trump-induced recession, or "Trump Transfer" as some call it, could force the top U.S. bank to start cutting again.