Trump pressures the Fed again! Calls on Powell to cut interest rates by 300 basis points, stating that Switzerland's 0.5% interest rate should be the target for the U.S.

During a visit to the Fed headquarters, U.S. President Trump once again publicly urged Fed Chairman Powell and the Federal Open Market Committee (FOMC) to lower the interest rate, stating that the United States should follow Switzerland and reduce the interest rate to around 0.5%. He also proposed an aggressive 300 basis point rate cut. Despite facing criminal charges in Congress, Trump confirmed that he has no intention of firing Powell. This article analyzes Trump's rate cut logic, Powell's political pressure, and the outlook for interest rate decisions ahead of the July FOMC meeting.

1. Radical Proposal: Imitate Switzerland's 0.5% Intrerest Rate, Call for 300 basis points "Rocket Fuel" Style Rate Cuts

During a tour of the Federal Reserve headquarters renovation, U.S. President Trump once again publicly urged Fed Chair Powell and the FOMC to lower the interest rate. Trump specifically pointed out that the EU has lowered interest rates multiple times, while the Fed has not taken any action this year after three consecutive rate cuts last year.

Trump emphasized that the United States should become the country with the lowest interest rates in the world. He specifically mentioned Switzerland's current 0.50% basis point benchmark rate and claimed that U.S. rates should also be lowered to this level, thus he reiterated his call for the Fed to implement a 300 basis point rate cut. The president believes that with the current economy thriving, inflation retreating, and the labor market stable, cutting rates will become the "rocket fuel" to propel the economy to new heights.

2. Political Pressure: Powell is embroiled in renovation scandal, resignation rumors abound

During Trump's visit to the Fed, Powell is facing political pressure due to the headquarters renovation project. Recently, Congresswoman Anna Paulina Luna has referred Powell's criminal charges to the Department of Justice (DOJ) on the grounds of perjury regarding the renovation cost issue.

This has sparked speculation in the outside world: Powell may be forced to resign, or Trump may dismiss him on the grounds of fraud. Therefore, the president's visit this time may be seen as one of the means to pressure Powell into cutting interest rates or at least resigning. Earlier this week, there were reports about Powell's resignation, but they were later confirmed to be untrue.

3. Personnel Positioning: Clearly no intention to lay off, but criticizes the interest rate cut actions as "too slow"

Trump again confirmed that although he believes Powell acted "too late" on interest rate cuts, he has no intention of firing the Fed chairman. The president acknowledged that firing Powell would be a "big move" that could ultimately jeopardize the independence of the Fed.

Trump stated that he has spoken with Powell and believes he will "do the right thing." He claimed not to have pressured Powell, but that "everyone knows what the right thing is," adding that "even those who once supported raising interest rates now hope to see a decrease in the interest rate."

It is worth noting that San Francisco Fed President Mary Daly recently acknowledged that Trump's tariffs had a smaller negative impact on inflation than initially anticipated. Based on this, she believes that two rate cuts within the year is a reasonable prospect.

4. Policy Outlook: July's Inaction Becomes a Foregone Conclusion, Interest Rate Cut Expectations Heat Up for the Year

Currently, the market generally expects that the Fed will keep interest rates unchanged at the July FOMC meeting. The CME FedWatch tool shows that there is a 97.4% probability that the Fed will maintain the benchmark interest rate in the current range of 4.25%-4.50%. Investors' focus has shifted to whether the Fed will initiate a rate cut cycle in subsequent meetings in response to economic data and political pressure.

Conclusion: Trump has once again thrown out the idea of a 300 basis point rate cut during his inspection of the Fed, highlighting his intention to use political pressure to intervene in monetary policy. Although Powell is mired in the renovation cost controversy, Trump temporarily rules out the option of dismissal to eliminate personnel uncertainty for the July meeting. The market generally expects this meeting to remain unchanged, but officials like Daly have hinted at supporting a rate cut within the year, coupled with the president's ongoing pressure, which may prompt the Fed to accelerate a policy shift in the second half of the year. Investors need to pay attention to the FOMC statement's hints about the rate cut path and updates on economic forecasts. The market has risks, and decisions should be made cautiously.