Unlock the White House Watch newsletter for free

Your guide to what the 2024 US election means for Washington and the world

Donald Trump has stepped up pressure on Federal Reserve chairman Jay Powell to reduce borrowing costs, setting up a potential showdown between the two men less than a week before the central bank meets in the US to set interest rates.

During an appearance in the Oval Office on Thursday to sign several new executive orders, Trump said he knew rates “better” than the Fed, and he wants to see them “more”.

The US central bank is widely expected to hold its benchmark rate between 4.25-4.5 percent next week, marking a pause after three consecutive cuts since September.

the feeding signaled a slower pace of cuts this year with some officials worried that Trump’s plan to raise tariffs, cut taxes and crack down on immigration would hinder efforts to beat inflation to 2 percent.

“The concerns (of the Fed) are not only about tariffs, but also a recognition that fiscal policy will not help lower inflation,” said Mahmood Pradhan, economist at Amundi.

But the Fed’s more cautious posture puts it on a collision course with the new US president.

Trump on Thursday said he hoped the governor would listen to his demands and talk to Powell “at the right time”.

“I think I know interest rates better than they do, and I think I know them better than someone who is primarily in charge of making that decision,” he said. said Trump. “If I disagree, I will make it known.”

Trump elevated Powell to the Fed chair during his first term in office, but has always been critical of him, especially for not cutting rates early in 2019. The president showed on the campaign trail last year that he would not attempt to remove Powell from his position before his term ends in 2026.

“If the Fed continues to keep rates where they are and he thinks it’s good to get a boost from lower rates, then there’s a real chance of conflict,” said Douglas Holtz- Eakin, president of the American Action Forum, a center-right policy institute.

Some economists say that if Trump’s policies push up rates it could force the Fed to hold back from further cuts or even raise borrowing costs.

“If the administration does things that really start to push up the inflation rate, the Fed’s mandate is very clear — they’re going to push rates up. And they’re going to get it in the neck (from Trump) if they do,” Mark Blyth said. , professor of economics at Brown University.

Trump used a speech to executives in Davos earlier on Thursday to say he wanted to lower rates “all over the world” – and told the Opec cartel that lower the price of oil to make that happen.

He touched on the theme again in his Oval Office remarks to reporters a few hours ago.

“I want to see the price of petroleum go down, and if energy goes down, that will knock down a lot of inflation. That will automatically lower interest rates,” Trump said.

He also raised on Thursday new doubts about Washington’s commitment to Nato and called for more defense spending by US allies in the pact.

“They are not protecting us,” he said of NATO countries. “We protect them. So I don’t think we should spend, I’m not sure we should spend anything, but we should definitely help them. But they need to increase their 2 percent (of GDP on defense spending) to 5 percent.

Trump’s comments on NATO came a day after newly sworn-in secretary of state Marco Rubio “reaffirmed US commitment” to the group, according to a transcript of his conversation with the secretary. -general of the alliance Mark Rutte.

Among other executive orders signed by Trump on Thursday was one creating a national cryptocurrency stockpile and another authorizing the release of federal files on the assassination of President John F Kennedy, ex-attorney- general Robert F Kennedy and civil rights leader Martin Luther King Jr. .

“The American people deserve transparency and truth” about the killings, Trump said. “A lot of people have been waiting for this for years, for decades, and everything will be revealed.”