Meeting with reporters at the Doonbeg golf course in Ireland on Sept. 13, Trump said "I don't know" when asked whether he expected the Fed to raise rates at the FOMC meeting, but added, "The U.S. economy is so strong that regardless of their formula, we should have the lowest interest rates in the world." He also stressed, "America's creditworthiness is the best in the world. We are making other countries rich. We could end that situation in two minutes."
With international oil futures recently topping $100 a barrel and August core consumer price index growth coming in at 0.3% month-on-month, above market expectations of 0.2%, most observers expect a September rate increase. On the Chicago Mercantile Exchange, the probability of a 0.25 percentage point hike in September stands at 86.2%.
But with Trump reaffirming that he wants the world's lowest interest rates, the FOMC's decision is likely to reverberate either way. If the Fed raises rates as the market expects, Trump's offensive against the central bank could escalate in earnest. If it holds rates steady, confidence in the Fed could be badly shaken and markets could swing.
In a CNN interview the same day, White House National Economic Council Director Kevin Hassett was asked whether Trump would accept a rate increase. "President Trump respects the independence of Fed Chair Kevin Warsh 100%," he said. "Whatever decision Warsh and the Fed make, we will support it 100%." On Trump's Sept. 4 warning to the Fed that "if they don't lower rates, we will halt trade with countries where we run deficits," Hassett said, "I don't expect trade to go to zero, but I think the president has very strong views that rates need to come down much more."
