Trump Warned Powell Not to Cut Rates Before the Election. Markets Are Still Expecting Them.

Donald Trump warned the Federal Reserve not to lower interest rates before the November election and said he wouldn’t seek to push Jerome Powell out as Fed chair before his term ends in 2026, according to a media interview with the former president and current Republican candidate.

“I would let him serve it out, especially if I thought he was doing the right thing,” President Trump told Bloomberg Businessweek in June, in an interview published on Tuesday. Trump told the publication that cutting interest rates before the November election would boost the economy and President Joe Biden’s odds of victory. “It’s something that they know they shouldn’t be doing,” Trump said of the Fed.

The central bank raised the federal-funds rate aggressively in 2022 and 2023 to cool inflation, which peaked at about 9% year over year in June 2022, as measured by the consumer price index. Price growth since has fallen to around 3% and recent monthly inflation readings have shown more progress toward the Fed’s 2% annual target.

With the labor market also showing signs of cooling, Wall Street has begun to anticipate a September rate cut. Pricing in the interest-rate futures market on Wednesday implied about 96% odds that the Fed’s policy committee will lower the fed-funds rate by a quarter of a percentage point at its September meeting, from its current target range of 5.25% to 5.50%.