NEW YORK — U.S. President Donald Trump demanded that the Federal Reserve cut interest rates, citing an August nonfarm payrolls report that showed a larger-than-expected gain in jobs. He pressed the central bank openly, warning that otherwise the United States would halt trade with countries against which it runs deficits.
Writing on his social media platform Truth Social on the 4th, Trump said a "great jobs report" had just been released and repeated his call for rates to be lowered to among the world's lowest levels, arguing that U.S. credit had improved. According to the Korean-language report, he said that if rates are not cut, the United States will stop trading with countries with which it runs deficits, and claimed that the Supreme Court, in what he called a foolish and costly tariff ruling, had strongly acknowledged that the president has absolute authority to do so. He also said the Fed's Board of Governors, which he described as having a great new leader, must become wise and act as patriots for change, adding that high interest rates expose the United States to a very unfair disadvantage and that he would not simply stand by and watch.
The remarks are seen as pressure ahead of the Fed's Federal Open Market Committee meeting on the 15th and 16th. Trump did not name any of the countries that run trade surpluses with the United States. CNBC noted that a threat to halt trade with countries against which Washington runs deficits is extreme, pointing out that the United States runs large trade deficits with dozens of countries, including major trading partners.
Nonfarm payrolls rose by 162,000 in August from July, the Labor Department said the same day, the largest increase in five months. As concerns over the labor market eased, market-implied odds of a rate move in September rose again. According to CME Group's FedWatch tool, the federal funds futures market raised the probability that the Fed would raise rates at the Sept. 15-16 meeting to 58.4% from 49.4% the previous day, while lowering the odds of no change to 41.6% from 50.6%. The yield on the two-year Treasury note, which is sensitive to monetary policy, jumped 0.091 percentage point from the prior session immediately after the jobs report, climbing to 4.425%.
