US President Donald Trump watches when he signed an executive order in the Oval Office in the White House in Washington, USA on January 31, 2025.
Carlos Barria | Reuters
President Donald Trump agreed to the Federal Reserve last week to leave interest rates unchanged.
In an exchange with reporters on Sunday, Trump said that it was the right step for the Fed for the Fed.
“I'm not surprised,” he said in relation to the decision according to several reports. “Keeping the installments was the right thing.”
The statement was in a strong contrast to a Trump who had spoken from afar to the World Economic Forum in Davos, Switzerland. In an appearance on January 23, Trump said that he would “ask for interest rates to sink immediately.”
The president has no direct authority about the Fed, although he appoints both the chairman and other board members. The current chairman Jerome Powell is a Trump candidate and a common goal of the President's criticism.
The markets do not expect the Fed to reduce interest rates by at least June. In his press conference after the meeting last Wednesday, Powell repeated that the Fed did not have to be in a hurry to continue to reduce after they shaved a complete percentage from the Fed Fund interest rate from September to December in 2024.
The decision-making of the FED became potentially more complicated after Trump said on Saturday that he would improve aggressive tariffs against Canada, Mexico and China, the three largest US trading partners. Economists fear that the tariffs will increase prices at a time when inflation has shown signs of loosening.
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