Despite "hawkish" signals from the labor market, Trump demanded that the Fed cut interest rates

U.S. President Donald Trump demanded on Friday that the Federal Reserve (Fed) sharply lower interest rates. Otherwise, he would cease trade with countries with which the U.S. has a trade deficit, he threatened in a post on Truth Social.

“LOWER THE RATE, OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A TRADE DEFICIT. The U.S. Supreme Court, in its absurd and extremely costly ruling on tariffs, clearly acknowledged that the ‘president’ has the absolute right to do so. THIS IS BETTER THAN TARIFFS!” Trump wrote.

According to CNBC, this was the U.S. president's reaction to a monthly labor market report that was significantly stronger than expected.

“EMPLOYERS CREATED 162,000 JOBS IN AUGUST. Lower interest rates, because the U.S. is now a much more reliable borrower than it was just a short time ago! A STRONG COUNTRY MEANS A LOWER INTEREST RATE—IT HAS A HIGHER CREDIT RATING,” Trump said.

Last week, Fed Chair Kevin Warsh adopted a hawkish tone, while on Thursday, Fed Governor Christopher Waller reassured the market by indicating that he was prepared to support keeping rates at their current level. The Fed has not announced any plans to lower rates.

“The Fed’s Board of Governors, led by its excellent new chairman [Kevin Warsh], needs to come to its senses—BE PATRIOTS FOR ONCE. High interest rates put the U.S. at an extremely unfair disadvantage compared to other countries, and I won’t let this continue!” Trump pressed the Fed.

The U.S. president made these remarks following the release on September 4 of data showing that U.S. job growth in August exceeded economists’ expectations by several times. A strong labor market left the Fed with less reason not to raise rates in September, according to Bloomberg and CNBC. Against this backdrop, U.S. Treasury yields began to rise again, the Dow Jones began to fall, and traders raised the probability of a Fed rate hike at the regulator’s upcoming September meeting from about 50% to just over 60%.

Following Trump’s remarks, market participants raised the probability of a rate hike to 62.6%, according to data from the CME’s FedWatch tool. Meanwhile, U.S. stock indices, which had been hovering near their previous close, extended their losses: the Dow Jones fell 0.53%, the S&P 500 fell 0.26%, and the Nasdaq Composite fell 0.13%.

This material is being updated

This article was AI-translated and verified by a human editor