Rates may not come down as much or as quickly as had been expected, just as Trump — a self-declared “low-rate guy” — returns to the White House.The New York Times reports that inside the Federal Reserve’s headquarters in Washington, there is a cautious and infrequent discussion of the incoming Trump administration. This is intentional, as President Donald J. Trump had a tumultuous relationship with the politically independent Fed during his first term. He often criticized the central bank for not lowering interest rates as aggressively as he wanted, and even considered firing Fed Chair Jerome H. Powell. As the Fed enters a new Trump era with interest rates higher than they were during his first term, tensions are expected to rise once again. Fed analysts are careful not to discuss tariffs in emails or meetings, as they do not want to appear anti-Trump. Hallway conversations are often generic and apolitical, and Fed officials and economists have avoided publicly speculating on the impact of Trump’s promised policies on growth and inflation. Despite their efforts to stay out of the limelight, it seems inevitable that the Fed will clash with Trump once again. During his campaign, Trump promised unprecedented interest rate cuts, but the Fed is unlikely to lower rates as much as he desires.
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